Once again the price of petrol has increased. Fuel prices are set to pinch the commoner’s pocket again as the government has decided to hike the prices of petrol, diesel, kerosene and LPG following a Empowered Group of Ministers (EGoM) meeting, headed by Finance Minister Pranab Mukherjee on Friday, June 25th, 2010. There has been recent increase in the price of petrol. On June 24, the government hiked the price of diesel by Rs 3 a litre, kerosene - Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder. This followed the hike of over Rs 5 per litre on petrol announced by oil marketing companies in mid-May. Although, the government of India is trying to control inflation in many sections, however, the state oil companies have already increased the price of petrol and aviation fuel by 4 and 2% respectively.
Taking a step that will add to the inflationary pressure on household budgets, there is also a hike in domestic fuels like kerosene and LPG. The prices of kerosene, which had been untouched since 2002, have been raised by Rs.3 a litre, while the cost of an LPG cylinder would go up by Rs.50 per cylinder. The government currently gives a subsidy of Rs.262 per cylinder.
Even before this recent hike,the Center had allowed the oil companies to hike the price of petrol in May this year by a Rs 5 per litre, making what it sees as the "rich man's fuel" costlier by 32 per cent in less than a year. It was the tenth increase in the price of petrol and the highest ever in one-go. Petrol now costs Rs 63.37 per litre at Indian Oil Corp (IOC) petrol pumps in Delhi up from Rs 58.37 a litre earlier.
Describing the government's decision to raise prices of diesel, cooking gas and kerosene as inevitable, the Prime Minister's economic advisory council Chairman C Rangarajan said that it would push inflation into the double-digit zone.He also said that due to the hike, inflation could be close to 10 per cent by July.However, he added, the inflation numbers would subside after the initial surge & expect that after initial correction, inflation will come down to 6.5 per cent by March 2012. The decision to raise fuel prices, he said, was inevitable in view of the rising crude prices in the global market and its impact on the fiscal deficit.
On this price hike,Planning Commission Deputy Chairman Montek Singh Ahluwalia on said the hike in prices of petroleum products would help ease inflation in the long run as it would suck money from the system & also said that as we are raising the prices, it will pull money away from the system & that would have a softening impact on inflation.
The Reserve Bank has already said rising commodity prices poses the biggest threat to the country's growth and inflation in 2011-12 and warned that the subsidy regime currently in place for certain fuel products poses a risk to the economy.
In regard to the petrol and fuel price hike, political parties played their political games to blame each other for this price hike in the name of common man. But I don't think that it will help at any extent to common man because they are the real sufferers due to this price hike.
Who are the sufferers due to this price hike? The answer is simple, Me,You & Every common man. The decision by the Government of India, to increase the cost of fuel and petrol, will result in high inflation, badly and heavily affect the working class, thereby provoking unrest. Initially the common man will stand to loose as higher fuel prices destabilizes this monthly budget. A rise in fuel prices implies a rise in the cost of everything without any increase in salaries or income. There will be a marginal fall in short term savings. In the long term when crude oil prices stabilize or stay at low levels for a considerable period of time then the common man will benefit. The higher cost of cooking, lighting and high transport rates will affect millions of common people, immediately and immensely. Nor only this, the cost of other important commodities and products will also increase. Many found it unacceptable and feared further hike in transport fares. The hike is unacceptable for most middle-class families like mine. We have to commute to various destinations every day and at home we use cooking gas. Fuel consumption seldom goes down as these things are necessities. This hike will have its effect on prices of other commodities too. We will have to sacrifice many things to save enough to meet the increasing fuel expenses. The brutal impact of soaring fuel prices is being felt by the entire Indian economy. The present situation compels and threatens to change the way Indians live, eat, enjoy and educate.
Rising fuel prices have also wound down the booming airline industry and affected the electric power plants of the country. The Indian airline industry was flying high but the sudden hike in fuel prices brought down the faith of other major players in the same field including Air India, Jet Airways, Kingfisher and SpiceJet. Indian power system also faces a great threat by the rising oil prices. The major Indian cities like Mumbai and Bangalore may face frequent load shedding due to oil shortage. In short, high oil prices have become a pain at the pumps, in the houses and even in the industries, dictating a heavy loss to the Indian economy.
Now it's the time to think the solution of this problem because it is the need of Today. Both the government and Reserve Bank have taken a number of steps to address the issue of high inflation, including the reduction of import duty on essential commodities. Among the other measures taken by the government to control inflation, some are the ban on export of edible oils and pulses, suspension of futures trading in rice, urad and tur dal and extension of stock limit orders in case of pulses and rice. As part of the monetary policy review stance, the RBI has taken suitable steps with 11 consecutive increases in policy rates and related measures to moderate demand to levels consistent with the capacity of the economy to maintain its growth without provoking price rise.
No matter how much the media debates and discusses, no matter how the political parties agitate, yet it will be the common man who will be the sufferers. The ultimate victim would surely be the citizens. On one hand as the rice in price of petrol and the associated products, made them costlier for the common people, thereby taking a heavy toll on their monthly budget, on the other, it sparked off several impacts on the daily life.
