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

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A Cynical Government

“Social welfare” has become a means to hide corporate capture of national resources.

One would have thought that after the revelations on the Commonwealth Games scandal, the telecom skulduggery and the coal block heists, the United Progressive Alliance (UPA) government would be a little careful about placing the interests of private groups over that of the common weal. That is not so. There is now a brazenness with which the UPA government is ever willing to shower benefits on particular business groups. Two recent examples are the decisions to double the price of natural gas and, earlier, to favour Abu Dhabi with a fourfold increase in passenger traffic capacity between India and that Emirate.

The decision to double the price of natural gas from $4.20 to $8.40 per million British thermal units (mmBTU) has been based ostensibly on the considered recommendations of a government committee set up to look into the issue. However, as independent analysts familiar with natural gas markets have pointed out, the methodology used by this committee seems to show no awareness of the structure of the market and the global prices and that the consequent “formula” is completely irrelevant. (See, for instance, “Natural Gas Price Hike: Subsidising Producers’ Profits?” in this issue.) It has also been pointed out that the rationale of a higher price attracting new investment to the sector does not wash, for similar price increases in the past decade have not yielded such outlays.

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