ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Politics of Petrol

The political response to rising petroleum prices is dangerously short-sighted.

The recent political drama over the increase in petrol prices staged by Mamata Banerjee and the Congress-led United Progressive Alliance government has only underlined the high political visibility of the issue and how it is used by every political party to try and garner narrow support for itself. This time the increase in prices of petrol, used primarily in passenger cars, was a little less than Rs 2 per litre but enabled the West Bengal chief minister to wrangle for her state hundreds of crores of rupees in promised grants by the central government.

The price of petrol is the most convenient occasion for political parties to show their concern for the “common man” and to attack the government for its “anti-people” policies. It has surely helped them that during a period of high inflation the price of petrol has been raised six times this year from around Rs 50 a litre to about Rs 70 a litre, varying over different states due to varying levies. The prices of diesel, kerosene and LPG cylinders used for cooking were raised only once, in June, by Rs 3 and Rs 2 a litre for diesel and kerosene, respectively, and by Rs 50 for an LPG cylinder. Today the price of diesel remains at around Rs 41 per litre (the price varies across the states), not much higher than it was two years ago. The last time there was such a rise in petrol prices was during the first Gulf War of 1991. The price of petrol went up from about Rs 8.50 to more than Rs 16 a litre, while diesel prices rose from about Rs 3.50 to more than Rs 6 a litre. The big difference between then and now is the presence of diesel passenger cars. In the early 2000s, diesel cars constituted only 4% of the passenger car fleet. With the wide differential today between petrol and diesel prices, consumers have been encouraged to switch to diesel passenger vehicles and these are today estimated to be as much as 40% of new registrations of passenger vehicles. Passenger cars are now the second largest consumers of subsidised diesel at 15% of the total. Bus transport and agriculture, traditionally larger users of diesel fuel, each account for only 12% of the total consumption, while the railways consume a mere 6%. The largest consumption of diesel (37%) is by freight trucks; consumption has grown primarily due to the neglect of the freight carrying capacity of railways by successive governments. The railways are by far the most efficient transporters of freight, consuming a fourth of the energy used by trucks to carry the same amount of goods.

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