Contemporary politics is high on the virtue-signaling rhetoric and low on virtue practicing. Sometimes due to the anarchical-unpreparedness of an issue, politicians give out the most absurd statements. One such curious case is of Oil Minister Dharmendra Pradhan when he defended the oil price rise (22 times in three weeks) by iterating that a ‘common man’ is not affected by this and Indian economy is going through tough times, therefore “when a problem comes in a family, the person carefully manages the finances to meet future challenges. The hike in fuel price should be seen like this”. What he actually (speculation) meant by this was, “I understand this is unacceptable given the cruel conditions but the government won’t do anything about this and the customers have to bear the weight”. It isn’t the first time that BJP leaders have made such tone-deaf comments but it stings more right now because the COVID-19 pandemic has shackled the world and no one is in the mood to hear bad news, especially the ones that can be solved.
What led to the upsurge in oil prices?
The oil prices have risen consistently, almost daily, for the last three weeks. India deals in the Brent crude oil benchmark with an increased price of $ 42 in the first week of July from the lowest at $16 in April. After the spiraling down of WTI and Brent crude in April, the Organization of the Petroleum Exporting Countries (OPEC) members drastically cut down their production due to dwindling petroleum demands, especially from huge market countries like India and China. But as the demand is increasing due to gradual lifting of the lockdown, the crude oil prices are also increasing but India stays affected due to weak dollar-rupee exchange rate. The price of diesel is higher than petrol for the first time with the former at Rs 80.53 and later at Rs 80.43 (Delhi). The general observation in India’s context is that fuel price has consistently risen in India even while the crude oil price per barrel was at its lowest. The oil companies and the government didn’t pass on the price reduction benefit to ‘common people’ in hopes of making more money to cover their losses due to fewer demands.
As rupee remains weak and crude oil price strengthens, the petrol and diesel prices are likely to increase even more as India will have to spend more money to procure oil from the free market-driven global mechanism. To tackle this situation, the government can take humane steps. They can reduce the tax levied on petroleum products but the government doesn’t seem very keen on doing that and is simply passing the burden to the customers who already have a lot poundage on their shoulders.
Amidst the rapid increase in oil prices, the opposition including Congress, Rashtriya Janata Dal, and Left parties took to streets and screens to protest the price hike. Multiple protests were held by Congress all over the country to point out that ‘the petroleum pricing is an extortion tool’. Congress said that the government is selling a liter of petrol to Indian customers at Rs 80 when the crude oil is bought at Rs 20 in the global market. There has also been an 820% hike and 258% hike in diesel and petrol respectively since 2014. The opposition pointed out that the ruling party is looting the citizens even during the time of a pandemic which exposes the insensitive nature of the government. Under the #SpeakUpAgainstFuelHike campaign, thousands of people expressed their grievances on social media platforms. Sonia Gandhi, in a virtual campaign, criticized the government and called it out for ‘causing misery to common people’ by collecting Rs 18 lakh crore as an additional amount due to increased taxes on petroleum products. She also insisted the government pass on the extra collected revenue to the people in need of it. Rahul Gandhi too took the matter on Twitter to call out the government on its dealing with the crisis that will directly hit the medium and small businesses. The tax rates on petroleum products are exploitative at 69% compared to a mere 19% in the USA. In an official statement by the Congress, the Rs 60 profit by the government on petrol is ‘sheer profiteering and fleecing of Indian people’. They also compared per liter rate in 2004 which at $42 per barrel was just 36.81 Rs compared to the current 80 Rs for petrol. The Congress also took out various camel and bullock cart rallies to protest against the hike in price. Rashtriya Janata Dal (RJD) members Tejashwi and Tej Pratap Yadav too took out a protest cycle rally in Patna. The Left Parties Umbrella bloc including All India Forward Bloc, Communist Party of India (Marxist), Communist Party of India, Communist Party of India (Marxist-Leninist), and Revolutionary Socialist Party came forward in protest against the government for ‘the price hike and mismanaged national lockdown’. They also made demands of providing Rs 7500/ month to families not in the income tax bracket for six months and distribution of 10 kg of food grains to the needy. For the protests, FIRs were registered against many Congress leaders for breaking the lockdown laws.
In response to the turn of events, the oil minister, Mr. Pradhan decided to bash the opposition (mainly Congress) instead of providing logical explanation on why such anti-poor steps were taken. Mr. Pradhan preferred buck-passing and said that the money from the fuel was been utilized for ‘welfare measures’ unlike Congress that indulged in ‘personal benefit’ during the Congress era. How the fuel money was been tunneled into welfare was not made clear by him as the specifics were not mentioned. He accused Sonia Gandhi of depositing welfare money in Rajiv Gandhi Foundation when Congress was in power. He also cited the opinion of BJP leader JP Nadda who criticized Congress for protesting against the oil price rise because Congress was actively raising prices when they were in power. It seems that BJP is more obsessed with Congress than Congress is with itself. The irony in BJP critiquing the opposition for raising their voice against the price hike is hypocritical when the majority of the BPJ’s companioning before elections and eventual winning was centered on fuel price rise when UPA was in power. How the tables have turned and BJP has done nothing to alleviate the situation and in fact, have made it worst.
How the rise in fuel prices affects the ‘common man’
Some basic understanding of economics tells us that, oil price does affect a common man from a microeconomic point of view and the country from a macroeconomic point of view. For an individual, upsurge in fuel price means oil expense taking a huge chunk in the daily budget of that individual. Even if the oil demand for that individual in the lockdown might be null but the goods and services will variably be more expensive due to the increased transportation costs to move goods. The people are in lockdown, the goods aren’t. With massive job losses in millions, next to zero savings, a ‘common man’ can’t afford the inflated prices of goods. The galloping price of crude oil also affects the manufacturing cost which is tied with the transportation cost. The car manufacturing sector has already been hit as they can’t afford the manufacturing costs due to low demand and pessimism on oil price rise. Not to mention that oil price hike is a two-fold setback for India’s economy because as we are already in a severe recession due to pandemic, a sharp increase in oil prices is always followed by a recession as witnessed throughout history and hence downplaying the issue and blaming the opposition for raising voice on a legitimate issue is indeed very insensitive. If remedial steps are not taken to tackle this situation, the economic growth rate of the country will be stifled (which is already in a precarious condition) and the demand and supply mechanism will be disrupted.
One can only speculate the rationale behind Mr. Pradhan’s absurd statement since he hasn’t come clean as to what he meant by common people not being affected by hiked oil prices. The congruous track record of BJP leaders of giving out strange, insensitive (also, unscientific) comments is a direct mockery of the struggles that a ‘common man’ has to face in this tyrannical world and its jarring realities.