Diverted by so many events around, the Indian public stands absorbed and hard pressed with the hike in petrol & diesel prices, yet again. Petrol or Diesel price in India, is a touchy subject and while we are collectively fighting repercussions of not just Covid-19 and its recovery process, we have the government to give us more worries. While everyone has a confused, wandering mind as to how the business & economy will upscale, there are border tensions going on too with our neighbouring nations. With such news & information around, the government seems to have taken advantage of this, while silently they have been increasing petrol and diesel prices, considering this will go unnoticed.

Sitting at June 22nd, 2020, while Petrol is priced at Rs.79.56/- and Diesel at Rs.78.85/-, we have no positive support to stabilize the micro economy of the households, nor the macro economy of the country as a whole. Diesel on May 1st, 2020, was priced at Rs.62.29/- per litre and on June 1st, 2020, it reachedRs. 69.43/-. Factually if we consider, petrol has been hiked by Rs. 9.21/- per litre while diesel has been hikedby Rs. 8.55/- per litre, in the last 16 days.

All these hikes have been taking place in India, even when the international crude oil prices retreated all through these months while the pandemic affected the entire globe. Crude oil is extremely weighed down due to an increase in US crude inventories and of course the Middle-East too. This supply excess led to price falls and the countries still continue to worry about a potential second wave of the corona virus pandemic, leading to such economic imbalances again.

The international crude oil price crash, to rarely seen levels, should have helped India to significantly cut the import bill, check inflation and boost revenue, if the government took advantage of the situation in a positive way for the benefit of the country. Crude oil was rated at $116 per barrel in 2011, even then the government could control pricing in India, keeping petrol rated at Rs. 58.37/- per litre while all through April & May 2020, crude oil stood at a low of $21.04, yet the price hike in petrol & diesel continues in our country, standing at a horrific shocking price of Rs. 79.56/- per litre for petrol and Rs. 78.85/- per litre for diesel as mentioned above.

The price effect took a steep increase and since the last few months, has been adding to financial pressure to the rich, middle class and of course the poor. Ideally crude prices falling internationally and the fact that India imports over 80 per cent of its requirements, tells us that the country would have needed to shell out a lot less money to buy oil from abroad. Low oil prices can not only reduce India’s import bills but it can also give a room to the government to divert existing funds to better priority areas; and put less burden on the common man. Further, low petroleum and fuel costs also bring down energy prices, moderating the inflation rate.

India being a net oil importer tends to gain immensely from oil slump on its import bill. All these facts are strong if we look at the scenario with an economic perspective, however, the situation right now, is a clear implication of ‘fund diversion & misuse by way of incremental prices of oil’, which is clearly not an economic approach, rather a political one.

This kind of hidden monetary gain via tax on oil, is not going to revitalize this nation, rather, will be adding to a bigger failure of economy, in the coming months & fiscal 20-21. Considering the strength in the oil-pricing sector for India between 2004 to 2014, a decade where there was progressive taxation yet a hold on unnecessary price inflation, Narendra Modi called it a failure, blaming the UPA. Today Petrol in India is the costliest in all of South Asia and no one to be blamed because the NDA can rest on its cushion support of covid-19 repercussions and excuses. Globally, the oil prices have fallen. It’s a simple demand-supply correlation to which countries have, helplessly, adapted to. But in India, though the economic growth is surely falling day-to-day, yet, this downfall has managed to cause a hike in prices of both, Petrol & Diesel, rather competing with one another.

In 2012, the Prime Minister Dr. Manmohan Singh, acknowledged the need to rationalize fuel prices. But, he affirmed & stated that at the same time it would have to be ensured that the poor is shielded from the effect of such a rationalization. Any change in fuel pricing is a political issue in India and eventually the consumers have to pay for the politics of oil. Understanding this as a lead economist & PM, Dr. Manmohan Singh explained the oil-price mechanism in the best of public interest. “The challenges we face on the energy front are formidable. We need adequate supplies of energy at affordable prices. Domestic sources of crude oil and gas are inadequate to meet the growing demands of our rapidly expanding economy,” he said. As a representative of not just the UPA but the country as a whole, he confirmed that to insulate the common man from the impact of rising oil prices, the Government shoulders a sizeable portion of the burden by pricing diesel and kerosene below their market price. Yet today, we see a complete contrasting economic policy implication, which has sadly got diesel & petrol prices to almost compete with each other & has left the common man stranded trying to cope up.

A middle class man, who travels to work in his vehicle, is pinched with extreme petrol price hike and the same has troubled and pinched the businessman too, who is struggling to survive during this pandemic and has to pay exorbitant prices for diesel for basic operations. Why does it seem that only few big names are being supported to grow in this country? There is no fair price mechanism in any sector and, of course, oil being the most important and the most basic variable for most economic calculations, it requires stability and justified pricing. With easy entry and exit norms for commercial coal auctions, the government expects participation from Indian companies and this is a new addition to diverting factors, to make industries and the public chase new developments. All this is being announced and taken forward as ‘new changes’, but no one to care about the ‘old mess’. What was being pointed out before 2014 verses what the NDA is actually practicing, is so ironical. In the name of ‘Make in India’ a small set of companies, individuals and governments are growing, to fool the public on the lines of ‘country progress’, but these are delusions & diversions.

To the layman, as informational pieces, the government has been proclaiming that 80% of our fuel requirements are outsourced and we are at the mercy of not only international market sources, but also the strength of our currency. If this was the case, then International oil prices falling down over all these months should rather have been an advantage to us. But again, the government’s actions are inconsistent with what they have been pronouncing. While the graph of covid-19 is still reaching its peak in the country, it is expected that we will surely be the worst hit nation; it is unfortunate that we are in the hands of a system which only concentrates on monetary gains for their electoral promotions.

It is very unjust that over 80% of India’s small businesses expect to scale down, shut shop, or sell off in six months. The ruling government has not just failed to provide basics like food & shelter to the migrants, but has also led to failure of the educated resources of the country, while all kinds of businesses are suffering deeply. There are difficult border tensions going on at every border of the country; be it armies or terrorists, the atmosphere is worrisome. But all that the government is focusing on, is ‘price hikes’ and greedy gains. Such a historic failure, brought by this government, where in the fuel prices are hiked over a stretch of 16 days, is unbelievably toll-taking for the citizens of this country, who are being fooled. Now is the time that India needs a fair government, which serves the people of the country.