Expensive Much?

I was travelling by an autorickshaw today, and instead of the usual Rs 60, I paid Rs 75. The rickshaw driver flashed the newly revised tariff card in my face and smiled. The reason for this increase is the increase in fuel prices. The ministerial panel had been contemplating increasing petrol and diesel prices due to a narrowing gap between domestic street price and global motor fuel markets. With prices in the global crude market cooling off, the increase required in case of deregulation was expected to be around Rs 3.50.

There were reports of a possible hike in the price of compressed natural gas (CNG) by Rs 6.50 and Rs 7 per kilo, and that of piped gas by 30%. Amidst these talks, autorickshaw union leader, Sharad Rao, made a fresh demand on June 3, 2010, for a steep 67% hike in the basic fare of autorickshaws i.e. from Rs 9 to Rs 15 per kilometre. After discussions with other unions from across the state, he said they would go on an indefinite strike if their demands were not met. Mumbai Taximen Union’s A L Quadros said that his union too wanted a hike from Rs 14 to Rs 16.

Nearly 2 lakh autorickshaws in Mumbai decided that they would go on strike on June 15, if their demands were not met. They also cited, as one of their demands, that electronic meters should not be made compulsory. The members of the panel under Finance minister Pranab Mukherjee – railway minister Mamata Banerjee and agriculture minister Sharad Pawar – were opposed to the idea of deregulation of prices. But a price rise by Rs 2-3 per litre of petrol and Rs 1.50-2.50 for diesel was bound to happen.

On June 22, nearly 1 lakh autorickshaws went on a flash strike. The reason being a fight between the auto and taxi unions. 55,000 taxis went off the roads because they feared attacks from the rival union. It was decided that the basic auto fare will be Rs 11 for the first kilometre and Rs 6.50 for every additional km in Mumbai. The basic cab fare will be Rs 16 and Rs 10 for every additional km. State transport minister Radhakrishna Vikhe-Patil directed the regional transport office (RTO) officials to immediately release revised tariff cards for both modes of transport. When the tariff cards were introduced on June 24, the RTO received calls from many citizens complaining about being cheated by auto and taxi drivers not carrying authorized cards.

Meanwhile, the UPA government, on June 25, announced the freeing up of petrol and diesel prices. The panel approved a Rs 3.50 per litre increase in petrol. The hike in diesel rates is limited to Rs 2 a litre, but will be left to market considerations. The price of kerosene will go up by Rs 3 to cost Rs 12.32 per litre. Cooking gas cylinder prices will be raised by Rs 35 and will cost Rs 348 in Mumbai. One of the implications is that inflation will rise by 90 basis points immediately.

The price rise is expected to discourage wasteful use by consumers, an issue that requires utmost attention. A short-term rise in price of goods is inevitable, but it will prove to be beneficial in the long run. Deregulation will lead to a reduced fiscal deficit. Inflation will come down in a few months because of the monsoon. Consumers will benefit through competitive pricing of fuel products. Household expenditure will not increase much; however travelling economically will be a problem.

The prices of LPG and kerosene have been increased, but they are much less as compared to our neighbouring countries. As far as auto and taxi fares are concerned, electronic meters must be made mandatory and there should be a check on unauthorized tariff cards. A helpline has been made available with the RTO, but it should respond effectively to peoples’ complaints. The UPA government has made a bold move which must be welcomed and not criticized. Corporate India feels that this reform will be good for the economy.

Roohi Mahapatra

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