Petrol price raised by Rs 2.35/l, Moily makes case for more | Business Standard

Petrol price raised by Rs 2.35/l, Moily makes case for more | Business Standard

Almost similar to the impact of changes in base interest rates on the cost of funds across sectors, the periodic hike in fuel prices have a direct impact on the prices of all products and services. This price hike is in a way to subsidise the losses incurred by oil companies.
The word subsidy, because of the way in which it is being used by economists, analysts and planners, has got a bad reputation in India. When flowers are destroyed in Holland market to manage prices, or costs of cultivation are supported in US to ensure production of certain commodities, or food coupons are given at reduced rates or free of cost to certain classes of people in developed countries, there is not much hue and cry over the cost to the taxpayer or ‘subsidy’ factored in, in different forms. So long as a rational costs-prices-wages-income policy is not in place, so long as starvation wages, unemployment and under-employment remain at ugly levels, problems of governance will persist and surface in various forms any government, making it difficult for the BPL (Businessman-Politician-Lawyer) leadership to go ahead with reforms just to support the upper middle class and rich people who account for less than 20 per cent of India’s population. ‘Subsidy’ will resurface in one form or the other.
It is evident from the pattern of asset-formation that a majority of workers in lucrative sectors like services, construction, mining, IT and processing are paid starvation wages. While everything else can be safely left to the mercy of the market forces, government has a social responsibility to protect employees’ interests by providing guidance on minimum wages for unskilled and skilled workers in different sectors, factoring in workers’ minimum needs and employers’ paying capacities. Similar is the case with prices of food articles and other essential items and services. The Food Security Bill (FSB) or schemes that provide employment guarantee (for a limited number of days at starvation wages) are ‘first aid’ solutions which will have to be replaced with long term solutions. The need of the hour is a national policy on prices, wages and income that looks beyond adverse inflation figures, which are eruptive symptoms of an ailing economy.

M G Warrier, Mumbai


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