The Indian society has started walking on a path where the economic culture and the social culture are becoming synonymous. The status of a person is known by what he earns, and it doesn’t matter whether the earning is legal or illegal, moral or immoral. The status of a politician/government servant is known by the kind of bribe he demands. The status of a businessman is known by the assets he possesses including the human talent. The status of a professional is known by the car he drives — even those who have no money to buy food want to drive Nano. The most important is the last category, and it is increasing at an alarming rate, at a rate as high as that of inflation last year, i.e. 15%; and, given the spiraling prices of crude in the international market, this rate is going to increase even further: When there was not much increase in the fuel prices, the Delhi Government doubled the prices of bus tickets for the Delhi Transport Corporation (DTC) wanted to earn profits! Don’t know what they will do now after petrol prices have been de-regulated! The Metro followed suit, they wanted to earn lots of profit.

The verdict is clear: We will have a few ill-educated nouveau-rich ruling over lots and lots of well-educated poor, on the same lines as the ill-educated politicians of the day rule over the well-educated professionals, academicians, bureaucrats, etc. I will give an example of a newly recruited advocate to substantiate my point: In the beginning, an advocate is not paid more than Rs. 5000-6000 per month; every day routine travel to and fro the office costs a minimum of Rs 30-50 per day if he doesn’t avail the luxury of traveling in a cycle rickshaw or an auto rickshaw or, for that matter, even a bicycle which is available these days at the Metro stations @ Rs 10 for the first hour and Rs 5/hr thereafter, thus the travel cost for a 20 working days/month comes to around Rs 600 – 1000; the shabby room, he rents, costs anywhere between Rs 2000 – 2500; the above adds up a minimum of Rs 3000/month, which leaves the advocate with a paltry sum of Rs 2000-3000/month for other expenditure, with which he can hardly afford food @ Rs 60-100/day — no movies, no outings, no shopping…no condoms so no sex even… On the other hand, a BPO/LPO employee is far better off and enjoys a far better status: He can splurge in shopping malls, in cinema halls, in restaurants, in booze bars, and, of course, in penthouses.  Now don’t blame the senior advocates for this: Most of them themselves don’t earn much, and, thankfully so, because lawyers are not supposed to earn a lot. The choice is simple: Join the club and serve the Haves by working in LPOs; eat good food and aspire to buy a Nano — food for sustenance and Nano for status.

What can the FM do in his budget? There are two alternatives for the FM:

1) Give more and more subsidies to the corporates so that they can cut the prices of Nano further down south, and those, who join LPOs can, thus, buy Nanos. Who needs advocates anyways? Police and politicians can take care of all law and justice.

OR IN ALTERNATIVE

2) Ban Nano. Lay down some bicycle lanes along with the flyovers, and give free/subsidized food to those who drive bicycles, and then you can well deregulate the oil prices.

The choice is simple: The FM can either make the Indian youth servant of the corrupt scum of the society or else give them the opportunity to make themselves and India a better society.

Comments dt. 27.02.2010

Mr. Pranab Mukherjee’a has commented that there is no more NEED to provide concessions now, so the customs duty on crude and petroleum products has been increased, and the excise duty on petrol and diesel has been increased too by Rs 1/ltr. Let us analyse this NEED because different people ascribe different meanings to this word.

The first need of the government is to compensate the oil marketing companies (OMCs) for their losses; the second, to control inflation; and the third, to ensure fiscal management. Let us see which of the above needs of the government has been given paramount consideration in the recent hikes and the recent reductions of fuel prices in India.

On June 05, 2006, the petrol and diesel prices were increased by Rs 4 and Rs 2 each in line with the increasing international crude prices. The NEED was felt to compensate the OMCs. At that time, the international crude prices were around $70/barrel, and the petrol and diesel prices in Delhi were Rs 47.51/ltr and Rs 32.47/ltr respectively.

On November 30, 2006, the petrol and diesel prices were reduced by Rs 2/ltr and Rs 1/ltr respectively. The NEED was felt to contain inflation. At that time, the international crude prices were around $60/barrel, and the petrol and diesel prices in Delhi were Rs 44.85/ltr and Rs31.25/ltr respectively.

On February 15, 2007, the petrol and diesel prices were reduced by Rs 2/ltr and Rs 1/ltr respectively. The NEED was felt to contain inflation. At that time, the international crude prices were around $60/barrel, and the petrol and diesel prices in Delhi were Rs 42.85/ltr and Rs 30.25/ltr respectively.

On February 14, 2008, the petrol and diesel prices were increased by Rs 2/ltr and Rs 1/ltr respectively. The NEED was felt to compensate the OMCs. At that time, the international crude prices were around $100/barrel, and the petrol and diesel prices in Delhi were Rs 45.52/ltr and Rs 31.76/ltr respectively.

On June 4, 2008, the petrol and diesel prices were increased by Rs 5/ltr and Rs 2/ltr respectively. The very strong NEED was felt to compensate the OMCs; therefore, not only the prices were increased, a stimulus in the form of custom duty cut from 5% to 0% on crude oil and 10% to 5% on petroleum products was also announced. The excise duty on petrol and diesel was also reduced by Rs 1/ltr. At that time, the international crude prices were around $135/barrel, and the petrol and diesel prices in Delhi were Rs 50.52/ltr and Rs 37.40/ltr respectively. The noteworthy point here is that the oil productions companies and the OMCs didn’t pass on the cut in excise duties and customs duty to the consumers.

On December 6, 2008, the petrol and diesel prices were reduced by Rs5/ltr and Rs 2/ltr respectively. The NEED was felt to contain inflation and also to fulfill the promise of passing on the benefit of decrease in global crude prices to the consumers. The international crude prices at that time were around $45/barrel, and the petrol and diesel prices in Delhi were Rs 45.62/ltr and Rs 32.86/ltr respectively.

On January 28, 2009, the petrol and diesel prices were reduced by Rs5/ltr and Rs 2/ltr respectively. The stronger NEED was felt to contain inflation and also to fulfill the promise of passing on the benefit of decrease in global crude prices to the consumers. The international crude prices at that time were around $35/barrel, and petrol and diesel prices in Delhi were Rs 40.62/ltr and Rs 30.86/ltr respectively.

On February 26, 2009, Mr Pranab Mukherjee, in his budget, has felt no more the NEED to compensate the OMCs, which need was felt on June 4, 2008; therefore, he has increased the customs duty on crude oil to 5% from 0%, and on petrol and diesel from 5% to 7.5%, and on other petroleum products from 5% to 10 %. He has also enhanced the excise duty on petrol and diesel by Rs 1/ltr. This has been done because the Government has felt the NEED for fiscal management.

From the above, one thing is clear: If the NEED which Mr Mukherjee is talking about is that of fiscal management, it has no connection whatsoever with oil pricing. If he is saying that the last time around on June 4, 2008, when the prices were increased by Rs 5/ltr and Rs 2/ltr respectively instead of the naturally required increase of Rs 10/ltr and Rs 5/ltr respectively the differential having been partly contained by the fiscal stimulus, the NEED was felt to not to overburden the consumers by increased prices. So, was there a NEED to control inflation so much so that the government ended up giving benefit of upto Rs 15/ltr and Rs 7/ltr respectively in a single year to the consumers! Agreed, at that time the inflation has been rising enormously; however, in the previous year, it has risen even more enormously; so, why FM is not feeling the NEED to contain the inflation now? If the fiscal stimulus then was not a NEED to contain inflation, but to compensate the OMCs, then there is no need to hike the fuel prices even now. FM will have to choose one of the two options: The NEED to contain inflation or the NEED to compensate the OMCs. If he is choosing the first option, he has presented an extremely poor budget, and if he is choosing the second option, any increase in fuel prices now means he has played criminal fraud on the people.

© 2010 Ankur Mutreja