Ad Here  
Need for big bang reform...
Need for big bang reform...
After assessing the support it can get in the Lok Sabha, the UPA took the risk of implementing a series of long overdue reforms like FDI in retail, aviation, insurance and pension.
BOTH THE FOREIGN and domestic media applauded the courageous stand taken by the UPA as big bang reforms.

However, the government was hesitant to do the same with the petroleum sector despite the bleeding oil marketing companies (OMC). A small step taken by the petroleum ministry to reduce petro-products subsidy will have little impact. 

Sadly, India does not have towering political leaders who can convince the public why liberalising petro- roduct prices is in national interest. There are no credible think-tanks who are able to convince the doubting public on the need to sell petro-products at market related prices while helping the poor through a fool-proof subsidy delivery system.

When OMCs were losing as much as Rs 19 per litre on diesel, the government allowed them to increase the price by Rs. 5 per litre. In the case of LPG, instead of almost doubling the price to stop the bleeding by the OMCs, the government limited the number of cylinders per family per year to six and introduced two more levels of prices for the same product. 

Now the same commodity is sold at five prices; subsidised pricing for residential customers for the first six cylinders, unsubsidised prices for residential consumers, discounted- prices for institutions like schools, anganwadis... market price for the commercial sector and even higher market price for auto sector. The prices varied between as low as Rs 29,155 per metric tonne for residential customers for the first six cylinders and as high as Rs. 89,469 for the automotive sector.  

One cannot think of a more perfect system to promote the generation of black money by having such a mind-boggling system of selling one commodity at five different prices. How can any one call this a big bang reform? 

By having a sophisticated IT system it may be possible to monitor the leakage of subsidised LPG sales. But it requires unprecedented level of monitoring which we have not yet seen. Even aadhaar platform may not be able to stop the leakages when the difference between the subsidised and unsubsidised price is so high. 

1 2
Author :
Reported On :
Sector :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236