Petrol at 100; Is it the new normal?

For the past few years, I have been observing that the petrol prices in India do increase in proportion to the rise in the international prices, however when the international crude prices decrease the local prices don’t decrease in the similar proportion. It does sound unfair. Doesn’t it? This is the new normal I am talking about. Is it really going to be like this now on? I think so, at least for a few years.

While the voters in India have grown considerably smarter, the media houses also have grown smarter as well. The voters now are not only looking at the end price they have to shell out of their pockets for one liter, they are also looking at the way taxes are distributed between state and center, which actually is a smart thing to do. This should give them enough clarity as to who to question; fixing the accountability. And media houses still continues to find ways to confuse the voters and create chaos. For instance, I saw a nice looking table in one of the news portals:

Although, it gives a good preview of the way taxes are distributed between different states and center, but it also does something more than that. Noticed Odisha? With 20.6 (state tax) and 87.03 (total price) the state does not fit in this table. Does it? But it is still there. Why? If someone were to complain, the news portal will simply apologize and say it was a mistake. Let me ask you a different question, which state would have made to the list if Odisha was not there? The answer would be Kerala. Kerala had a higher price (Rs. 88.71) than Odisha on Feb 1. In fact as of today, the price in Kerala Rs 92.79. It was done intentionally, but no one can prove it.

Not only this, petrol prices in India have always been electoral issues. There have always been massive protests, marches towards the CM’s residence for instance in 2013, Jail Bharo and what not in the name of price rise. Quite surprisingly, there are elections scheduled in five states namely West Bengal, Kerala, Assam Tamil Nadu and Puducherry but still I could not find all these five names in any comparisons. I find discussions about Delhi, Maharashtra, Rajasthan, MP etc. They are not going for elections, its no use discussing them and not the others. Why are the media houses so wary of putting the information of states like Kerala and WB in their articles? Why?

I can imagine why. The central government has explicitly and overtly justified their reasons for tax hikes. The oil bonds! As a matter of fact, central government has to pay INR 10,000 crores by the end of this year i.e. in October and November. Not only this, the government has to pay (22,000 + 4,150 + 5,000) Crores i.e. INR 31,150 crores before the general elections in May, 2024. Have a look at the table below:

You could find the receipt budget here. So, in short, if the petrol prices affect your personal budget, you should consider re-calculating your personal budget allocation. Because this indeed is the new normal. It would stay like this till 2026.

Not only this, the central government has already made it abundantly clear that they have been paying INR 9,990 Crores every year towards the interest payment accrued due to these bonds. Have a look at the table below:

You can have look of the copy of the Interest Payment section of the budget here. This is not the only year where the government paid this amount. The government has been paying this interest since 2014. Have a look at the trend below:

Quite interestingly, looking at the graph above gives me an impression that the government lead by a Chai-wala is managing its finances in much more organized way as compared to the government lead by world class economist; talking about the uniformity from the graph. The central government has made their reason for high taxes pretty loud and clear; what is the reason for high taxes by the states? Are they going to make the contribution towards the oil bonds too? This is one of the biggest reasons, why media houses and opposition parties are not putting up this issue in poll bound states. They know they will lose the face.

Moreover, people knew this was coming.

Sometimes I see a lot of similarities between him and Duryodhan. Duryodhan always knew the difference between the right and the wrong, but for some reason, always chose the wrong. Now you know why Congress was dead silent on the price rises before BJP used its own wild card to rack this issue up. I mean Subramanian Swamy:

People thought, he is a rebel and upset with the party. The fact is, the more people talk about the petrol price rise, the more Congress gets charred.

For us the regular voters, we have two models to choose from. One that Congress followed between 2004 to 2014, and the one that BJP is following since 2014. For me, I like the current model. I personal dislike accruing interests unless I am the one receiving the interests. I think INR 9.990 crores paid by the government annually is a complete waste of money and as such is an election cost that helped Congress win 2009 and we are paying it now. I took a snapshot from Ravish Kumar’s prime time show, a few weeks ago:

When the international crude prices were extremely high in 2008 hovering around $147 a barrel, petrol prices in India were around INR 45. This is the very reason for these Oil bonds and the extra interests. Now we are paying the extra prices, when the international crude prices are as low as $61 in 2021 the petrol prices are at an all time high at INR 100. Its the payback time.

Modi government could still follow the very same Manmohan Singh Model and some one like me would be writing a very similar looking article ten years from now. Probably it would be me again.

Which model do you choose?
A. Modi Model
B. Manmohan Singh Model

Thanks for reading!!! Please do mention your opinion in comments and if you liked the article, please do share it with your friends and family. Thanks!

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