Reality Check India

The great Indian fuel price bait and switch

Posted in Uncategorized by realitycheck on November 20, 2008

cal

The above chart is not the Indian petrol price chart.

In June this year, the Congress led UPA government raised petrol prices by Rs 5, Diesel by Rs 3, and LPG (Cooking gas) by Rs 50-150. This was on the grounds that crude was at $150 / barrel. In response, everything from autorickshaw fares, bus fares, restaurant food prices, lorry load charges, shot up. The conditions under which this specific hike was thrust on a nation already struggling with inflation have long ceased to exist.

For the past two months, crude has been below $70-$90. Now, it has stabilized below $50 (todays price $48).  Gas prices have fallen around the world in response. Yet in India, a billion people are being robbed blind, economic activity is being suppressed by this artificially high variable cost, everyone wants a bit of the windfall enjoyed by the oil companies ( there is a even a proposal to hike the excise on fuel).

ON BOARD PM’S SPECIAL AIRCRAFT: Prime Minister Manmohan Singh appeared to rule out cutting prices of petrol and diesel till oil companies stop making losses on fuel sales.

Contending that there were “limits to which government can go on subsidising”, Singh said it will wait till oil companies stop making losses before considering cutting petrol and diesel prices.

“When we see that the Indian oil companies are able to sustain a reduction, that will be the right (time for such a) decision,” Singh told reporters late Monday night on way back to New Delhi from his three-day maiden visit to energy rich Gulf countries.

Dr Manmohan Singh in a recent interview

Dr Singh, I think what you meant to say was, “……. when we see that Indian oil marketing companies are able to sustain a reduction – or we have elections, whichever happens first, will be the right time to take this decision”. We desis all know that this is simply a case of building up the books of the oil marketing companies in preparation for a cut near the elections. Free markets anyone ?

There are some who are claiming that the oil marketing companies are still losing on diesel. Can the oil companies make a profit on diesel ? If you make a profit on a subsidized item, can it still be called a subsidy ? If you make a 5 Re profit and petrol and 20 paise loss on diesel, it means you have made a net profit of 4.80 despite the cross subsidy. This is a fake argument.

There are still a few “free agent” voters who might be charmed by an election time price cut. As this blog has been saying – the locked-in voters do not give a rats ass about inflation or fuel prices or terrorism or 6 hour power cuts – they simply vote for their leader who protects their exclusive benefits from examination. Like any rational person would.

Blog note : Regular activity will resume on this blog. I took a break for a while, then had a tough time locating my password. Finally tracked it down.

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11 Responses

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  1. shadows said, on November 20, 2008 at 6:18 am

    Well,

    The oil companies have already accumulated a huge loss. Most of the profits on fuel go to the government coffers (excise, sales tax, etc).

    Manmohan and Sonia are just waiting for election time to cut prices

  2. shadows said, on November 20, 2008 at 6:20 am

    Ooops.. not profits. The selling cost, it is.

  3. reason said, on November 20, 2008 at 5:32 pm

    i think this time it could be different. in normal conditions, terrorism would have no big impact because terror attacks target capitals and metros, and vast majority of the people have no stake in the cities or in its economic activities. and on the other issues, most of us are used to high inflation, high interest rate, low growth and buying sugar only in ration shops from our parent’s days.

    but people are also emotional beings.

    i think the powers scripting the maharashtra ATS drama read it wrong. the seculars could have done nothing on the jihadi terror attacks, taken no action, and could still have won the elections. But they took some action in delhi and mumbai because of the assembly elections, then panicked when the ultra-seculars started a campaign, and resorted to the ‘hindu terrorism’ script.

    the media played its bit, partly because it could be a man-bites-dog type story for them, but i think in large measure due to their idea of secularism.

    I would love to see a opinion poll that measures how hindu middle class is reacting to the deluge on hindu terrorism. they are used to huge terror strikes disappearing from headlines the very next day and be gone for ever, but this hindu terrorism thing stays stuck on the headlines for weeks now. i get a feeling there is a reaction, but in the absence of a poll my feeling is based on stuff like the response from hindu readers to the hindu’s editorial.

    we do have a sizeable middle class, measured at 200million in some reports. if they can be got to the polling booths, the results can be different.

    did you register to vote?

  4. realitycheck said, on November 21, 2008 at 3:07 am

    When analyzing things in India, always peel off the top layers.

    The great public unknown, I keep talking about is – how many people of each caste / religion are there in this or that constituency.

    Now, this may be unknown to us, but it is quite well known to the street level operators of political parties.

    The ATS behaviour, such as leaking to the media, openly speculating on very weak evidence, give away their possible goal of making this a noisy instead of efficient investigation.

    If the Congress party supports this loud attack, trust me – it has done its caste level arithmetic at the street level. They can put a thousand Purohits behind bars, yet a Yadav will vote for Laloo, a Vanniar for Ramadoss, a Christian for the Congress. The loss of free agent hindus would have been accounted for by the polarizing of muslims and christians (due to no fault of these communities).

    The Indian government is just a confederation of castes, lets stop pretending it is something more than that.

    > did you register to vote?

    Absolutely. I have seen how the machine works from close quarters.

    As a matter of fact, there is no such thing as register-to-vote here. You cant simply walk into a govt office and walk out with a voter ID. The idea again is to make it as difficult for the free agents as possible. If you are a locked-in voter, then the local councillors / party functionary will come to your house and deliver your voter ID. Case in point, none of the students studying in hostels are able to vote in their area. Why ? Students of all castes, have a greater tendency to act as free agents. Once they grow older, they get wiser and act as locked in voters. The spark is gone.

    I am helping a free agent retiree who has been trying for over a year to get a voter ID. He can start a blog about the run-around they are giving him presumably due to him looking and talking like an obvious free agent.

    >> we do have a sizeable middle class, measured at 200million in some reports. if they can be got to the polling booths, the results can be different.

    Nope. There is no data to suggest that polling rates in ‘middle class’ areas are drastically lower than in other areas. The real answer is – middle-class is not a cohort as far as elections in India are concerned. Maybe there is a Christian middle class, a Brahmnin middle class, a Yadav middle class, and what not.

    We are not evolved beyond that.

  5. reason said, on November 21, 2008 at 5:29 am

    “As a matter of fact, there is no such thing as register-to-vote here. You cant simply walk into a govt office and walk out with a voter ID. The idea again is to make it as difficult for the free agents as possible.”

    For me in Bangalore, it was as simple as walking into a government office and walking out with voter id. I had been enumerated into the voter list before the assembly polls in a door to door drive, and my name shows up in the online voter list of CEO karnataka. I forgot to note down the details from the online voter list, but still the staff were helpful enough to go through their paper copies to locate me. And they even have a website to show complete addresses of the places where voterid drive is going on in bangalore.

    I am not sure if in the part you live, the vested interests are ensuring that Hindu middle class do not register. The last assembly elections in Tamil Nadu, people living in certain areas of Chennai for decades found their names missing in the voter list. Such instances need to be fought. There are contact details in every state election commissioner’s website.

    “Students of all castes, have a greater tendency to act as free agents. Once they grow older, they get wiser and act as locked in voters. The spark is gone.”

    apparently not, if you live in Tamil Nadu. And you possibly do not live in TN, given you made this comment 🙂 The chennai law college students are very unlikely to be free agent voters.

    I disagree with you on the Hindu middle class part. In the absence of data even in the form of a credible opinion poll, we have no way to resolve that difference. To me, the karnataka assembly elections are a reasonable indication of this middle class. I have gone thru the numbers from the eci spreadsheets. BJP polled 2.5% less than the congress state-wide, but swept all urban centres by comfortable margins (except in mysore). Delimitation would help in increasing middle class impact. And note that I leave out the recent, upwardly mobile IT or international careers group from ‘middle class’.

  6. realitycheck said, on November 21, 2008 at 6:16 am

    Good for you. Dont tell me you also got a ration card in 2 days 🙂 Sadly, this is not the situation here. Re-reading what I wrote, perhaps I overstated a bit.

    The chennai law college is not representative of all colleges in the state. The student community by and large is the last chance.

    Lets agree to disagree about the middle class part. I will stick to my claim that self interest will trump everything else at the polls. There may be some who vote for larger interests at the expense of their own group/community interest. These are just mutants in the system.

    PS : I do live in TN.

  7. reason said, on November 21, 2008 at 7:32 am

    I didn’t try for ration card in bangalore, but following the discussions here it appears it is pretty easy too if you bother to make the trip to the office and spend 2-3 hours.

    I dont know if you overstated your experience with voter registration, if you lived in TN. I suspect TN is a way too far gone case, and it is about time for a quick and sudden reversal. believe me that these things can happen though it appears impossible now.

    I had seen reports of voters from specific neighborhoods being left out of the list in Chennai in 2006 elections, and I dont think that was an isolated incident after seeing your experience.

    and i disagree with you that the chennai law college case is isolated, and i do so with facts. there were protests – from students, no need to mention their caste groups – for making PSG in coimbatore and another engineering college in madurai into deemed university. The only grounds for protest was quota, and no thought about pros or cons of a deemed university (pros would faaaaar outweigh and i cant think of a con). So, TN may be a basket case now, but things turn around just when you think they wont.

  8. reason said, on November 21, 2008 at 5:17 pm

    by the way, on your post itself, you should know the plot by now. The government will say no reduction in prices, the party will demand a reduction, and it will get resolved when the supreme being gets involved. and then all will sing hallelujah. expect something before 27th.

    You said >>
    “If the Congress party supports this loud attack, trust me – it has done its caste level arithmetic at the street level. They can put a thousand Purohits behind bars, yet a Yadav will vote for Laloo,”

    there are all kinds of conspiracy theories.

    Strangely, I think of the movie disclosure, last meeting between michael douglas and demi moore – Douglas asking Moore “Did it ever occur to you, Meredith, that maybe I set you up?”

  9. xyz said, on November 25, 2008 at 12:49 pm

    There is truth in what reason is saying.I lost my voter card 8 years back.I have attended two sessions for taking photographs,given the application 3 times.I have not yet got the new voter id card.

    As i have said a trillion times,the tamils are different.

  10. rc said, on November 25, 2008 at 1:25 pm

    >> If the Congress party supports this loud attack, trust me – it has done its caste level arithmetic at the street level. They can put a thousand Purohits behind bars, yet a Yadav will vote for Laloo,”

    >>> there are all kinds of conspiracy theories.

    There is no conspiracy here. Self interest is supreme. Free agents can be converted to locked in voters by chaining them to a benefit at the pleasure of a protector. Conversely, locked in voters can become free agents if these benefits are removed or the role of the protector is made weaker by data. This is why data is a life and death issue for political parties.

  11. xyz said, on November 25, 2008 at 3:41 pm

    Meanwhile,I have voted in many elections using other documents.

    RC,I should have said that i agreed with you.I can very well empathise with the senior citizen who is being made to run around for his fundamental right.


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