Ache Din dream sinks once again in dearer petrol

Petrol and diesel have become dearer as petroleum companies have increased their prices owing to, in their opinion, the increase in international crude oil price and a depreciating Indian rupee. Since the UPA government removed Administered Price Mechanism (APM) for fuel pricing, petroleum companies have a near free reign in deciding the price of petrol and diesel. 

Though in theory the prices would be decided on the basis of the market forces of demand and supply, our practical experience suggests that the companies are not always inclined towards passing on to the end customers the gains they receive as a result of decreased crude oil prices, but they always show great alacrity in raising the prices when there is an increase in global crude oil price. Moreover, only a naive observer will assume that the central government has no influence on the petroleum companies vis-a-vis their power in deciding fuel prices in India. Therefore the government can hardly put the whole blame on the petroleum companies in a bid to save its face when there are protests against fuel price hike.

In the last two weeks fuel prices were increased twice resulting in an aggregate increase of Rs.7.91 for petrol and Rs.5.69 for diesel. When asked about the fuel price hike government managers in channel debates are pointing out that petrol prices were decreased when there was a major decrease in global crude oil prices and they complained that people didn’t appreciate them when that happened. However, even a cursory glance at data for the past one year will show that when crude oil prices were reduced up to 54% (prices have since increased), fuel prices in India were reduced only up to 10%, which would mean that the advantage of decreased crude oil prices were not passed on to the end customers but were used to fill the coffers of the petroleum companies. 

Now let us see some calculations to find out how the petroleum companies, with the connivance of central government, fool laymen and increase their profits. On 16 May 2014 when international crude oil price was $109.75 per barrel, petrol price and diesel price in India were respectively Rs.71.41/litre and Rs.56.71/litre (Delhi price). When today, exactly one later on 16 May 2015, international crude oil price is $66.57 per barrel, petrol price and diesel price in India are respectively Rs.64.24/litre and Rs.52.28/litre (Delhi price). Therefore, when international crude oil price has reduced by 39.34%, petrol price and diesel price have reduced only by 10.04% and 7.81% respectively. If the companies were to pass on the whole benefit of reduced global price of crude oil to the common man, they should have sold petrol for Rs.43.31/litre and diesel for Rs.34.40/litre (Delhi price).

Modi government also can’t excuse itself from the blame of increase in fuel prices. When the global crude oil price decreased the government had increased the excise duty to claim a part of the benefit that lay Indians had received. Now that the crude oil price has increased the government appears in no mood to reduce that increased excise duty to lessen the burden on the people. Modi government came to power riding on the huge wave of resentment against the UPA government largely due to its inability to control price rise. But once in power, Modi government is treading the same path of economic policies that UPA had travelled. Decrease in global crude oil prices had eased out inflation in India and the Modi government was boasting about the said reduction. Now with this increased fuel prices inflation is all set to come back.

Weakening rupee has been cited as another reason for the rise in fuel prices in India. When pre-poll surveys had predicted the probability of Narendra Modi assuming the role of Prime Minister of India, some financial experts had predicted about rupee growing stronger and even reaching 40 per dollar (this view was even endorsed by lifestyle guru Sri Sri Ravi Shankar). But as of now no such positive movements are seen arriving.

A perusal of the balance sheets of major public sector oil companies in India, which are available in their websites, will show that the loss they claim to be making because of volatility of crude oil prices is a farce. They are by no means incurring huge losses but only a reduction in profit volumes. When the government remains silent on the face of such blatant deception from the oil companies it becomes clear that it does so for the benefit of private oil companies like Reliance and Essar and for the public sector oil companies.

Ache Din was supposed to come to Indians once Narendra Modi became the PM, or so he and his supporters had claimed. But till now it doesn’t appear to come even from the very distant horizon. Any dream of ache din, which those poor people who had voted for Narendra Modi had in their minds during voting, is in grave danger of being sunk by the avalanche of costlier petrol and diesel.

Stronger Tories take charge of the United Kingdom

The 2015 elections at United Kingdom sprang up a surprise when, contrary to expectations of political pundits, the Conservatives under the leadership of the incumbent Prime Minister David Cameron won by a simple majority. Requiring 326 seats for a simple majority in the 650 seats British Parliament, the Tories won 331 seats, which has allowed them to take charge of the country without the support of the Liberal Democrats, with whose support they were in power for the last 5 years. When the Lib Dems faced a near rout, the Labour party fared below par with 232 seats. The Scottish National Party (SNP) took the election results by storm, winning 56 out of 59 seats in Scotland. Left-wing Green Party and the right-wing United Kingdom Independence Party (UKIP) have won 1 seat each.

Scotland had always been one of the historic heartlands of the Labour Party, but the emergence of Scottish National Party as the main voice of the Scots has made sure that the Labour lost big time in that country. Though the SNP was unable to convince the Scots that separation from United Kingdom was for their benefit during the referendum, they had made strong inroads in the minds of the Scottish people, which was made all the more evident from their strong electoral show in the country. The SNP has made sure that the voice of the Scottish people would be heard loud at Westminster. 

Liberal minds of United Kingdom would heave a sigh of relief on finding that the UKIP has got just one seat in the election. The right-wing, anti-immigration party was very vocal in their policies and ideas against immigration and immigrants. They had also called for UK’s independence from the European Union. It is heartening to know that the space for the extreme right in UK politics is still quite narrow. Even UKIP leader Nigel Farage failed to win the elections as only Douglas Carswell was able to win it for the party. The party won a vote share of 13%, which would roughly come around 3.8 million votes.

One of the main issues on which the election was fought was the economy. Big budgetary deficit of UK has been an issue that was in the minds of every party. The Tories and the Labour had been promising people that they will cut the budgetary deficits to manageable levels and even create a surplus by the end of the term of the Parliament. Parties also promised increase in employment opportunities or jobs for all who are willing to work. While the Conservatives pledged a tripling of loans to business start-ups, Labour promised to raise minimum wages from the existing level.

Membership in European Union is a contentious issue in United Kingdom. The Tories promised to hold an “in-out” referendum on Britain’s renegotiated EU membership by 2017. At the same time the Labour party promised that they would guarantee no transfer of power from Britain to the EU without a referendum.

Britain’s growing economy has been attracting many skilled and un-skilled employees to it, mostly from other countries in the European Union. There is a growing sense of discontent among native Brits on the influx of immigrants and the right-wing UKIP has been at the forefront in making use of this for political gains. Labour had promised to ban recruitment agencies that recruit only from other countries, whereas the Conservatives claimed that they will reduce immigration by making it difficult to immigrants to gain benefits in UK.

Now that David Cameron has a clear mandate to govern Britain he can longer use the excuse of coalition pressure to not act on his promises. However he would surely be tested on many fronts. Thumping win that the SNP has achieved in Scotland would embolden them and Cameron will have his task cut out in managing their aspirations vis-a-vis another referendum on the Scotland question. He will also have to take immediate action to reduce the budget deficit, bring back the economy on track, settle the EU predicament, find amicable solution to the immigration issue and set his foreign policy priorities. He may also have to fend off in-party challenge from the backbenchers and move on with his agenda.

At the same time Labour Party and the Liberal Democrats have to find new leaders and chart out a plan to get back to the reckoning in the minds of the Brits. The Labour Party has to find a replacement for Ed Miliband after he resigned from the leadership of the party after the terrible loss. The centre-leftist party must regain its lost ground in UK, particularly in Scotland, where it has ceded ground to SNP. Nick Clegg of the Lib Dems has relinquished his leadership of the party and now the party should also defenestrate the neo-liberalism expounded by Nick Clegg and co. and regain their social democratic heritage, if they want to remain relevant in UK.