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The price of the hike

delhi Updated: Jun 05, 2008 01:13 IST
Aloke Tikku
Aloke Tikku
Hindustan Times
Highlight Story

As the Congress’s allies and foes moved swiftly to attack the government over Wednesday’s decision to raise fuel prices, Prime Minister Manmohan Singh made an appearance on national television to explain the inevitability of the “modest”, if unpopular, hike.

Singh’s address to the nation was not only aimed at tempering criticism that comes in the backdrop of an 8.1 per cent inflation rate but also educating the growing middle class about conserving energy, the global oil and food crisis and to prepare them to pay more to ensure food and energy security for future generations. He also urged state governments — “many of whom tax petroleum products substantially” — to contribute to this effort by reducing state taxes and levies.

The prime minister emphasised that just one-tenth of the impact of rising international crude prices had been passed on to the consumers, and the government and oil companies were bearing a substantial burden by issuing bonds and giving up profits. But he made it clear that this could not be done indefinitely and stressed the need for “more corrective measures in the future on many fronts” and a sound strategy for energy security.

“We are only passing on our burden to our children who will have to repay this debt… We cannot think only for ourselves, for the present, for the here and now. We must think about what is good for future generations… It is our duty to ensure their food security and energy security,” he said in his address, recorded around the same time that the petroleum minister was to go public with the hike.

“Business cannot go on like this for ever. We need to learn to adjust to this new international scenario,” said the Prime Minister, in an obvious reference to crude prices scaling astronomical heights in global markets.

“We need to pay economic cost of petroleum products. There are limits to which we can keep consumer prices unaffected by rising import costs,” he said.

Singh, who began with the steps that the government had taken over the past few years to improve living conditions, made it a point to refer to concerns over higher inflation rate. Though India was able to produce enough to feed its people because higher production had been incentivised, the prime minister pointed to the dependence on imports for oil and the rising global trends.

With the Indo-US nuclear deal in limbo because of opposition from Left parties, the Prime Minister sought to garner support for the country going for nuclear energy. “We have to develop alternative sources of energy, what ever be the source. We cannot remain captive to uncertain markets and unsure sources of supply. We have to develop renewable sources of energy, including nuclear energy,” he said.

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