Your editorial Protest, but honestly, (Organiser, dt. June 18, 2006) was bold and intellectually an honest piece. We hardly get this honesty of purpose in politics these days. During the NDA regime, the Centre was urging the states to privatise power distribution and NDA and Congress joined hands to pass the Electricity Act 2003 in which such privatisation and freedom from government monopoly in power were the central features. Yet, when a BJP state tried privatisation, the Congress protested and vice versa. This, despite as much as 50 per cent of power being lost during distribution through government owned and operated networks.
Oil price is another area where the political class is showing its inability to face the facts and seeking to mislead the public. From Congress to BJP to the Left everyone is protesting. But all of them know that the price of petrol and diesel for the common man cannot be the same now when international oil prices are 73 dollars a barrel as when they were 40 dollars. If the international price goes up by leaps and bounds, supplying oil to the people at the old price amounts to subsidising the sale of petrol and diesel (kerosene, LPG etc., also). The Left is calling for a cut in the taxes on petroleum products to keep the retail price low. This is a dishonest argument. If the Government (Center and states put together) get Rs. 70,000 crores from these taxes, cutting them down could only mean so much loss to the exchequer. This leaves him with only two alternatives: either cut the development expenditure or impose same amount tax on other commodities or services to make up. Either way the public pays.
It is no doubt true, as you suggest, that any increase in petroleum product prices would boost inflation and lead to an across the board increase in prices. But that is precisely the way the market economy adjusts consumption and supply, force the public to cut its coat according to its cloth and also increase efficiency in the use of resources. For instance, in 1974 when oil price shock shook the US economy, the government there made an all out effort to reduce oil consumption by increasing the efficiency of usage and promoting alternate sources of energy. As a result oil demand fell by as much as 40 per cent. Oil producers had to roll back and prices came down to almost 18 dollars per barrel for many years. We do not hear a word from the political circles on improving energy efficiency, use of alternate sources of energy etc.
The politicians should have protested about the inefficiency of oil usage like the Ambassador cars giving eight km per litre while the new ones give 14 km. US, Japan and European governments are promoting hybrid cars and electric cars to reduce dependence on oil and get more out of each litre of petrol. Here, the Government itself is the largest user of the old and 8 km per litre Ambassadors. Why is it that political leaders not asking for a shift to more efficient cars and promoting research and development on hybrid cars? For instance the Government can mandate the auto companies to come out with a 20 to 25 km per litre car by a fixed date, say 2010 or shut shop. Blending with ethanol and use of bio-diesel are other steps that should be mandated instead of merely being debated.
India is rich in sunshine and it costs nothing to harness it though initial capital costs may be high. There could be a targeted subsidy for all homes that use sun'senergy for water heating and cooking. Building codes need to be rewritten to improve energy efficiency in homes and offices?learn this from TERI building in Gurgaon. Yet, how many high-rise buildings in Delhi follow this example? Almost none. Let the politicians protest before the Urban Development Ministry to impose such revised energy efficient building codes?if they are honest enough.
The more important steps, no politician is willing to promote. That is, delinking petroleum prices at retail level from government interference. A step in this direction was almost finalised during NDA regime in 2003. But electoral politics prevailed and further action was put off. The long years of administered price mechanism has made the public believe that it is the Government that fixes these prices. Thus when global prices for oil rise, the Government gets all the blame if it adjusts the retail price to cope with this high oil price. If the administered price mechanism is totally dismantled, and anybody is allowed to import and sell oil and its products, you will see a dramatic fall in retail prices, as competition would force oil companies to raise their efficiency. Learn this from what happened to telecom. In 1980s under government monopoly we had high prices for STD calls, huge waiting list for connections and lot of underhand payments to get a connection. Today under competition, a supply glut has replaced the waiting list. STD charges between any two cities of the country have come down from Rs. 24 a minute to just one rupee a minute. The only losers are the politicians who used to some unaccounted money. The experience was the same with scooters, cars, sugar, housing, etc. In the 1980s we had a spectacle of loan melas by public sector banks. It turned out to be a fraud. In year 2000 we had banks running after you with loans at seven to eight per cent. And a housing boom resulted.
I recall that in the late 50s when rationing of foodgrains was the rule, in Madras province, Rajaji as the chief minister took the bold decision to abolish rationing, relieve the farmers from the foodgrain levies that were most unpopular and let the open market decide rice prices. Many warned that disaster would follow. What happened was that though price of rice slightly went up, overnight rice was available everywhere. Rajaji was proved right.
In New Zealand a Labour Prime Minister abolished subsidies on meat and all controls, soon meat became cheaper and freely available benefiting both farmers and consumers.
Whether in the area of power, or oil, or subsidies, the politicians act like ostriches. The public suffers as a result and the same politicians then organise protests and demonstrations and make a huge show of ?jail bharao?. Can dishonesty be clearer than this? Aren'tthe politicians making a fool of the public?