Oil Price Hike

  • SumoMe

The form of oil used by modern day vehicles is called crude oil or petroleum. As the demands of the exponentially increasing population have grown, greater needs of communication and transport have also arisen. With the latest scientific discoveries, the prices of vehicles have become so low that it could be acquired by common man with ease.

And today, we have almost every thing on the street driven by oil. Thus, the rising demand expended the oil resources that were primarily locked in the fossil reserves beneath the earth surface to a limited quantity.

Consequently, we are running out of the precious oil resources and are perhaps ourselves responsible for being forced to find alternative options to substitute the void that will be left in less than 30-50 years from now. As the sources are limited and the demand does not seem to be decreasing, the cost of the substance is increasing by leaps and bounds. Every second or third month we are faced with the possibility of another hike in the petrol prices.

The acutely few resources have put high pressure on the Indian market and the government is waited upon to act on the situation. The price had risen by at least Rs.10 in the last six months and it is expected that there will be another approximately Rs. 17 hike in the coming few weeks. The problem lies in analysing the situation at hand from the perspective of the government. There exists a grave dilemma that needs to be solved. And the decision has to be taken soon.

With the global prices of oil rate as high as $127 per barrel, the Indian prices are far below. Therefore, to make the internal prices upto that level, a hike of at least Rs 20 per litre is necessary. If the government decides not to increase the prices, the major stakeholders who will be affected are the government oil companies that buy oil from foreign companies. Bankruptcy is a sure result in such a circumstance .

Since the government can’t allow state-funded companies to become extinct without effecting any changes, it is entrusted with an inherent responsibility of making some policies. The policies to be formulated have to incorporate not only the companies’ needs but also of the common man. A hike of that scale would mean disturbing the economy of the nation to the core. There is unbeatable pressure on the public exchequer and can’t be sustained by it for long treading the same lines.

Thus, there has to be a concrete solution for the problem as the government can’t afford to upset the public upon whose trust is formed the pillar of the government’s anchor. Especially right now when the electoral sessions are so close, any political stance would be mindless to adopt such measures. This would inevitably result in widespread disbelief in the government and is sure to generate huge opposition for the next elections, if not an early exit by the public and the opposition.

An alternative to this lies in reducing the duties and taxes on oil. The duties imposed on imports and other trade can be reduced so as to effectively decrease the rate at which petrol can be bought by the public. This would allay the fears to some extent. However, it cannot be implemented blindly as decrease in duties would mean a decrease in revenues for the government. That restricts the facilities provided by the government to the public and has a lower limit below which the deployment of daily activities by the state would be hugely hampered.

Thus, a measured and balanced hike in petrol price has to be realized along with the cut in the duties. This hike can be used by the opposition in the next campaigns against the Congress but the present government has to take the step, but it may be too late. Trying to preserve the seat can cost the nation’s independence as recession is highly probable, given no intervention of the state in the current trend of prices.

Arpita Chakraborty

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