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Different Approach


The opposition parties are focusing strongly on the rising prices of petrol, diesel and LPG in the effort to wean voters away from the BJP. They are reminding people about the noise the BJP had made against the UPA Government for the high prices in their time. This campaign will find traction because there is no doubt that ordinary people are being greatly inconvenienced. It may even have an impact during the coming elections. However, as is the case with the agricultural reforms, there is a vital difference between the UPA era policies on fuel pricing and those of the present dispensation. The prices rose during the UPA era despite the efforts of the government to keep them down, while the present situation is essentially the result of government policies.

In the effort to make fuel ‘affordable’ for the people, the UPA took upon the nation the cumulative cost of petroleum products. That meant that, instead of the actual consumer paying for the product, it was the general taxpaying public that did so, which by any measure was grossly unfair. In the case of subsidies on diesel, meant for the benefit of farmers, the well-to-do took to buying SUVs that ran on this subsidised fuel. In other words, the rich benefited off the subsidies meant for the poor. (This was the case in many other areas during the two terms of the UPA.) All this also resulted in rising consumption of petroleum products that had to be mostly imported, causing foreign exchange problems among other things.

In contrast, the Modi Government from the start has been trying to wean people away from subsidies, and also make better choices in an environment that offers many alternatives. It has disassociated government from the fuel pricing process. The better off were asked to voluntary give up LPG subsidies, which a large number did – they did not have the option earlier. This made it possible to provide gas connections to the needy. The money that the government makes from taxing fuel is going into building better roads and expressways, which make travelling far less fuel consuming and, in the end, cheaper. Also, better public transportation is being offered in terms of metros, CNG run taxis and buses, etc. Electric vehicles are available in every category. Eventually, the price barrier to fuel consumption will force people to give up pollution emitting vehicles, reducing public and private expenditure on health. Sadly, there is little appreciation of this fact and it could hurt the NDA politically. Thankfully, thus far, PM Modi is keeping the higher good in mind than just clinging on to what would be purposeless power.