Whenever petrol prices are hiked, there are protests by the public and the Opposition for a few days, before everybody goes back to their routine but it is to be remembered that the country’s economy is being fuelled by the blood of the common man. Many nations face higher inflation rates due to the rising oil prices in the world. As a consequence, the higher inflation rates have a devastating impact on both production and consumers that leads to a big difference between oil importing and oil exporting nations. Though the oil prices are market-based, the government can reduce tax as a populist measure.
High inflation, coupled with skyrocketing food prices, has botched to come down. The oil price rise results in a transfer of income from oil importing to oil exporting countries according to a shift in terms of trade. The increase in the price of oil has risen the cost of fertilizers which need petroleum or natural gas to manufacture. Natural gas has its own supply issues as oil. The rise in petrol price, in turn, has a rippling effect. As all the commodities are transported across India on vehicles that run on petrol or diesel, so the increase in petrol price results in price rise of these commodities as well.
The additional burden of the rise in fuel prices is becoming unbearable for the public and is another slap on people’s face. Petrol has become an indispensable part of our day-to-day life, and we can’t imagine our life without it. But the petrol prices are skyrocketing, and it is eventually going to affect each and everything that we use in our daily life. Price hike affects only the low wages or fixed salaried middle-class families as compared to higher wages salaried class.
Inability to control rise on price control of petrol and diesel will add fuel to public dissatisfaction on the government performance and the Opposition will take a plea on this issue although they know that the government has nothing to do on international price control of crude oil. There has always been a lot of discussion and debate on the hike in the prices of fuel. Most problems arise because of the unchecked growth of vehicles with low mileage or gas guzzlers. Fuel prices need to be rationalised. Much of the taxes from fuel pricing are used for development work. This, when clubbed with populist subsidies, becomes terrible. A sharp spike in the price of oil will also reverse the declining trend on inflation and put pressure on the central and state governments to cut taxes on petrol and diesel, which is likely to adversely impact their non-goods and services tax revenue. In spite of the heavy price hike, the rich continue to live the life they are used to while the burden is borne by the poor and the middle-classes. As we are fully dependent on the international market for fuel, we need to cut short our dependence on it. What we need is the development of bio-diesel, and the government should allocate more funds for developing alternate sources of energy as well as develop high capacity goods and public transport system. The government should advise the state governments to cut ad valorem duty on petrol and diesel. It should cut its own excise duties on petroleum products.
The government needs to rethink on the deregulation of petrol prices. The increase in fuel prices has affected the most. Time has now come when we need to think of alternatives such as biofuels and solar power. It is to be remembered that Petrol is inflammable, but the cost of petrol is highly inflammable.
(The views expressed by the author in the article are his/her own.)