In recent times, petroleum has grabbed unexpected attention for all the wrong reasons. Escalating oil prices? Build new petroleum refineries. Costlier airline tickets? Blame it on the aviation fuel. However, little attention – and limelight – has been given to those who depend on fuels like kerosene in their daily lives. When the aviation industry gets affected by decreasing passenger traffic, the media goes into a frenzy regarding all possible permutations and combinations that might be required to save the industry. However, little space is devoted to describing what the global financial crisis has meant for those living on the fringes of society.
Although it would not be wrong to say that the crude oil crisis has affected markets in a big way, it is incorrect to discuss the impact of this crisis only on investment banks and major corporate houses. The financial crisis has assumed such gigantic proportions that its effect has permeated to every stratum of society. From the lowliest farmer who uses cooking gas everyday to the biggest banks on Wall Street, the meltdown has affected all and sundry. Unlike major banks that can rely on central banks for bailouts, the common man has no such messiah. It is important, therefore, to initiate a discussion on how the impact of this crisis can be softened and cushioned for people belonging to the bottom rung of society.
The Indian Government has done more than its fair share of price control in recent times to ensure the good of the common man. The fact that India happens to be a protectionist economy, ensures that a large part of the fallout of the global crisis does not trickle down to the masses. By means of subsidizing fuel for the common man, the Government has tried to play a responsible role in the current scenario. The Government has even shown its willingness to let oil companies, especially public sector undertakings, face losses if it helps to ease the burden on the people. Its critics have argued that the Government’s actions are politically motivated and are intended only to sway electoral votes. It is also pointed out that the farm waiver policy, which was apparently doled out only to appease gullible voters, have further burdened banks that are also facing a credit crunch. Critics have also accused the Government of showing little interest in responsible monetary management, since the targets set out under the Fiscal Responsibility and Budgetary Management Act have largely been missed by the Government.
However, what should be borne in kind is the fact that in a country like ours, where a large section of the populace depends on subsistence farming, and the removal of such subsidies would spell disaster, since people are already reeling under sky-high inflation rates. As the Government sits down to mull over the future course of oil prices in India after a fall in global oil prices in the recent weeks, it will be interesting to see what choices it makes and who it chooses to save- the bleeding oil companies or the common man.
[Image Source: http://express.howstuffworks.com/gif/oil-on-water.jpg]