Ad Here  
November
December
January
February
March
April
 
 
Marketing expert Balagopal is no more CIPET hqrs to stay at Guindy – for the present? When small is no larger beautiful.. CRS, a jewel among managers, is no more. Solar thermal shines… The Jan Dhan bonanza Measuring roof tops in terms of KW/MW B H Kothari - a tribute Muffled voices for merit… There was flood of milk. Reason: no milk commissioner! Computation of GDP – conundrums continue Alexa – Talking Wikipedia Demise of a media baron... Secularism and anti-Hinduism A Grand Finale for SN’s MS centenary at the US… Delhi returns to BJP Kulandai was a giant Reliance’s TV – 18 ready to launch Tamil News Channel Cutting the nose to spite the face Come elections, come advertisements... Music happens Tribute – Manikam Ramaswami More Shakthi to Das’ elbow F C Kohli - his concerns all embracing Parliament in paralysis... IAS invades NDDB... Rahman at CIC No engine for this car A more liberated TN… An enemy’s enemy is a friend The star of Spencers is no more Airlines in India: cost and space Revive development banks... Limit foreign borrowings to hi-tech, export potential projects... Lesson from Chandrababu Naidu Poor representation for Kerala and TN in Cabinet Boy, can you beat these? A professional at the helm of IRDA... The ‘Jayanthi Tax.’ Padma Bhushan for A Ramakrishna Building loyalty through the stomach When the President was rendered homeless… Another Indian music maestro at the UN The rise and rise of KCP Fuel for thought Nuclear power at the nucleus CSR and CMI: promise of another Srinivasan Ramanujan... The Swadeshi Trump Insurance companies bleeding, yet no decision on increasing FDI limit! A glass full of corruption Adharma of opposition politics Convulsions in The Hindu Delhi is distant Adapt Vajpayee dinner diplomacy The balancing act Why land prices zoom in TN? Shipping woes of Chennai companies Tihar, Puzhal not different from Parappana Agrahara The power-full Hindujas A C Muthiah – his munificent bequeaths to science Tough task taking states together Funding the un-funded Silver Years of Madras Musings Readers' Mail Poor quality of university VCs Not just in-laws (and outlaws); they’ve renowned academics at the helm! Medical costs hit the roof... Noble nonagenarians... Making ‘my Amaravati’... Cleaning Ganga – relocate tanneries and install electric crematoria IPL type auction for VCs? When TN politicians can emulate Kerala's Of course, Gujarat is vibrant Plummeting profits of PSBs Lalu’s envy, India’s pride Should we change the official year? Cement prices continue to rise… The ‘Ayyo-yes’ is no more Odisha: spectacular win by Naveen Patnaik Liberal imports idling indigenous capacities Wanted: a second airport for Chennai Tribute – UCAL Selvan… TGS- The king storyteller A welcome initiative by the judiciary Engineering seats go abegging L&T: focus on infrastructure and more infrastructure… When nations steal growth from one another… Recognition to role of NBFCs.... Maximising the micro pricing … Tax agriculture Mersal magnified Shaming of Tamils by Tamil farmers at Delhi Kudos to NDTV... Moily’s bold thrust London, London Narayan Welcome changes that testify to Jayalalithaa’s return to health Fortune 500 review TIAM turns a full cycle Tatas moving out of urea production... New IT products of Ramco in the pipeline… Online not in line with brick and mortar businesses... Dr C Rangarajan returns to Chennai R Sridhar steps down as CEO of Shriram Capital Air Asia India will set new benchmarks for budget travel Land reclamation from sea appears cheaper! When online building permits work…. He saved millions from starvation... Auto components surge… TN – agglomerate land holdings without alienating ownership GM Technology at last! Discoms deserve better… The rise and fall of Annamalai University Excel Generators provide the vital back-up Towards speedy justice Paytm karo... GNS - 100: our first subscriber A think tank for Chennai A Grand Finale for SN’s MS centenary at the US… Quality education through the PPP mode Don’t seem to feel the pulse… The Ports’ Pasha expands into Tamil Nadu How Air-India loses customs... The nuclear option TN-leverage strength of BHEL, NLC... Inflation: are we emulating Argentina and Brazil? Naidu’s return augurs well for Seemandhra Bihar – Nitish Kumar adopts the Lalu model Solar, solar everywhere … Put expensive assets created to use... SoA @ 80 Tatas moving out of urea production... Sweet news for TN sugar mills Gas is the way forward Delhi Chalo... Roaring Ro-Ro facility Gay abandon in pricing A yen for wastage… Editor's Notes Revving up the manufacturing sector Return to king coal for urea... An inexplicable neglect An informal presentation - analytical, forward locking... All eyes on Sankara Nethralaya Haul over the coal L&T- the specialty of special purpose vehicles Intellectual of rare qualities Like Hinduism: many paths to reach God... Waning interest in public discussions… Mu Sigma – is no more No Maha Koottani in TN... The Gulf aviation boom Focus on quality of power - its only around 170-180V The few handicaps... Delhi is distant… Modi storms Silicon Valley Align crops to agro climate endowments… Rs.1600 crore paper board plant of TNPL More Shakti to resource mobilisation... Five star activism stalls development activity Which side are you, Montek? Make standards certification mandatory... Where is Rajaji? Breaththrough in malaria control More heat than light Sri Lanka votes for change Polls and promises Editor's Says Preserving for the future Scientists urged to take up farmer-oriented research Godspeed, Chief Minister JJ The why of tax incentives S Ramanathan – a versatile musician, musicologist PPP mode for upgrading Corporation Hospitals MHC should not return to its old indisciplined ways West Bengal: mindless malignancy Modi and the lady S V Raju – a ‘good’ true liberal CII projects higher growth… Permanent secretariat for TN GIM Strengthen the base... Banning booze... Wise Presidents Naidu will soon build a new Hyderabad EVM is tamper-proof Russi Mody – a tribute WTO Meet: resolved to meet again When Ratan Tata visited SRM Protest masters... Welcome thrust on trade in Modi’s foreign visits... No mega rail project for Tamil Nadu Welcome GST Welcome focus on core competence The brown list of Venkitaramanan Sweeter prospects for sugar Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated Increasing non co-operation of state leaders Valli, they are more marginalised Contrarian cousins Small units prefers to remain small... Build close rapport with business leaders Why this malaise in medical education? IPL - no surprise this scam Telangana in top gear… Quality silica from Neyveli TN accounts for the largest recruits by the IT sector Tribute – M V Murugappan Fortune for Indian Airlines …and of a popular trade leader This scant respect for Law Shale gas and its shallow future Bihar elections - the Rajaji formula worked A rich pool of talent not utilised…. Road development slows down Streamlining mandatory third party cover Colour-Chem’s colourful KRVS TELANGANA at last…BUT Vibrant Gujarat EEC at the National Media Centre PC’s preference for professionals Eternal support for capitalisation of PS banks More tributes to GR For whom the MIDS bell tolls? Pharma – overdose of copying A friendly business group Kinetic Karnataka Multi-faceted Venkat He continues the focus on social amelioration to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines Where a state respects its litterateurs… Fall in crude prices help in oil sector reform Whistle-Stop Tour of Raghuram Rajan A proud Madrasi Tribute Diamond jubilee of Egmore Samskrt School ONGC at KG Basin Infrastructure funding – lessons learnt Things happen by accident and not by design... Remembering Indira Sivasailam... Shanti and Sadhana through Music China invests in India For whom the bell tolls? Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai Robber barons everywhere The sea- saw battle continues...
 
Fuel for thought

I find an interesting contrast. The average American adjusts with ease and equanimity to wild fluctuations in the price of gasoline. The average Indian finds it difficult.

Petrol prices in the US have always been lower than most countries in Asia and Europe. When crude prices shot up a few years ago to more than $ 4 per American gallon (3.75 litres), there was a lot of grumbling, but there was also resignation to the fact that prices were market driven.  So people adjusted their lifestyles – they moved away from larger sports utility vehicles (SUVs) to smaller cars; hybrid cars saw massive increase in sales, people cut back on driving vacations, etc.

Since 2014, when crude prices crashed, petrol prices dropped to as low as $ 1.35 per gallon; with exchange rate of Rs 68 per US dollar. This meant that petrol was available for just around Rs 25 per litre through 2014 and 2015. People went back to buying larger vehicles, and hybrid sales growth slowed. In my current visit to the US, I notice the price shooting up to $ 2.75 per gallon. This translates to Rs 49 per litre! The average American has taken this doubling of price in a year in his stride.

In India the contrast was stark. Successive governments at the Centre have been struggling to cope with the huge increase in crude prices. The Vajpayee government attempted to move away from the administered price for petroleum products in 2002. The then Petroleum Minister, Ram Naik, told journalists at the Economic Editors Conference that the regime of controls would be over. On that promise, Reliance Industries, Essar, Shell and ONGC entered petroleum marketing through hundreds of retail outlets. The three private companies also set up a good number of petrol/diesel dispensing stations across the country. These, in fact, were different from the dilapidated and often depressing outlets of the public sector oil marketing companies of Indian Oil, Hindustan Petroleum and Bharat Petroleum. In fact, the glittering and clean appearances of the new entrants triggered the change on the part of public sector outlets as well.

The frequent and significant increase in crude prices, along with the resistance on the part of average consumers, continued to challenge government’s attempts to rationalise pricing. Thus, successive governments, including the NDA and UPA found it extremely hard to adjust petrol and diesel prices to cost. Along with LPG prices, diesel and kerosene prices were kept under control. Only the price of petrol was deregulated and this resulted in petrol prices shooting up to around Rs 78 per litre in retail.

The Modi government was incredibly lucky in crude prices crashing to little over Rs 30 per barrel through 2014. This made it possible for the government to dispense with price control on diesel. It also took bold to dispense with the old system of huge subsidisation of LPG. The Aadhaar platform was used along with the Dhan platform to deliver subsidy directly to the beneficiary. In that process, the government was able to eliminate a large number of bogus claimants. And the appeal of the prime minister also helped to wean a good number of the haves away from the subsidy.

The government also adjusted the excise duty on diesel and petrol upwards to benefit out of the fall in crude prices. Thus the full effect of the decline in crude prices has not been transferred to the consumers. This was necessary to bolster up the revenues of the Central government at a time when industrial growth was sluggish and corresponding revenue growth was not to expectations.

When the price of crude increased from a low of around $ 30 to more than $ 50 per barrel, the retail prices of petrol and diesel inevitably increased. Oil marketing companies adjust these prices periodically, and the consumers and several state governments have been voicing their protest.

One is thus able to see the contrast – the ease with which the US has been able to adjust to variations in the price of crude and its absence in India. State governments that run a large fleet of public transport, find it difficult to increase fares in tandem with rise in the price of diesel. Thus, they protest vociferously over the continuous and sizeable increase in the price of diesel. It needs a lot more efforts to explain the why of these fluctuations. Unfortunately, policy makers in the centre are not quite capable of doing this.

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
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
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com