Sunday, 18 September 2011

A short lived pleasure?

The pleasure

 I like to fly. No, make that - I love to fly! I have flown on many airlines to various continents and countries. Each has been a different experience. Long distance flights, usually do mean a stop in between, giving the benefit of being out of the tube for a bit, stretching the legs, gazing at the products on sale, people watching, etc. Shorter distance flights mean smaller aircraft usually lesser leg room, but more take-off and landings. Either way, being in a flight from 100-40,000 feet above mean sea level, means many things to me. From the excitement of actually having lifted off, the destination, the beautiful working people on board i.e. the Flight Attendants, the conversations that happen between total strangers who are bound together in a flying tube for a few hours, the movies watched or food consumed, all of it brings a different sort of sensory pleasure in the 1-2 kilos of soft jelly-like substance inside my skull.

Maybe it, really, is about the whole 'movement' principle. If you are moving, chances are, you are doing something meaningful, in some manner, so to speak. Driving long distances is an equally good example. Love it too. Managing the steering wheel, keeping a fine balance of safety and speed within regulated limits, listening to music, watching places, people and objects go by - all bring that sensory pleasure. Maybe it really is true that life is about searching and experiencing the little and large pleasures. Maybe it is the seeking that is the pleasurable part. Either way, making sure that you live life to the fullest has to be an objective that you would agree with, wouldn't you?

All of the above now seem like a short lived pleasure!

Having spent some time in the Gulf, where fuel prices are really low in comparison to the rest of the world, and link infrastructure - especially roads, are in fantastic condition, I could say, I was spoilt with the consumption of the sensory pleasures of driving or flying. Even on a visit to Hong Kong, using public transportation that moved me efficiently was a pleasure. And while the price of owning vehicles is quite high due to limited land mass and congestion, the price of fuel, or travel, is not.

The Pain

Having been back home in India, for a bit now, reality has started sinking in to my dismay. I feel like that hungry child from whose hands, the treat has been snatched away. Make no mistake about it, I am an Indian and happy about being one. But am discontent with the way in which the policies of this country's government are created or implemented. Sure, I understand that there are 1.2 plus billion people in this land and that it is the 7th largest country in the world. But that, is no excuse for 60 years of ridiculous action or reaction, by the people's representatives, elected by the masses to govern, with the hope that these people will make life easier rather than almost impossible.

The latest blow to the Indian, has been the pricing of fuel. Regular petrol now costs: R 70 per litre equivalent to USD 5.7 per gallon (3.8 litres). It costs approximately USD 2.5 per gallon in America which is one of the largest consumers of fuel. An article by the Times of India, indicates that after taking into account the purchasing power parity after accounting for international fuel prices and currency exchange rates for India, petrol is still more expensive than all other countries in the world, barring 3 small countries! Diesel is more expensive than 136 other countries. In my opinion, fuel prices in some of the European countries are also higher than India. Whatever way the statistics are read, fact remains that Indian fuel pricing strategy is an anomaly that needs some serious attention from all of us. And not be misled by the publicly pronounced massive subsidies that the government claims to provide.

The policy mess

It is not merely foolish, it is downright crazy! Even if we import 70% of fuel from outside India, we have a pricing mechanism that ensures we pay far more than necessary. Over 50% of the cost of fuel in India is added taxes. This mechanism in reality, hurts everybody and everything - economically, financially and personally. Every time, fuel prices are increased there will be spate of activities ranging from strikes to protests to violence - which itself has a huge cost to all of us. And a few days later, we go back to our lives, grumbling and groaning in pain. Maybe this is because we are the great Indian democracy. Or maybe it is our ability to soldier on, thinking it is really beyond our control. Or maybe we are being extremely foolish.

First the government taxes fuels way too much. Then it claims to provide subsidies to keep prices down. Then it adjusts for inflation by increasing interest rates. The government does not create quality infrastructure from these taxes. This results in more bottlenecks as the number of people out in the market increases. Thus consuming even more fuel. This leads to even higher fuel imports. It is a vicious, never-ending cycle. Unless, the government can actually focus on streamlining the whole tax and fuel pricing mess. But who actually cares? Who actually wants to do anything about it? We can have a nation marching together for an anti-corruption crusade, but is there anybody out there who wants to sort this mess out?

The solution

Irrevocably, free the pricing. Privatise the oil supply and marketing firms. Less than 1% of Indians are employed in the government oil firms. Offer them the option of 3 years pay, until they either secure a job in the private firm or let them go. Let the market and currency exchange rates decide the price on a daily basis. Realistic taxation on the sold market prices of fuel, not the current rates which are unhealthy. Can you believe that over 65% of the Indian GDP basket taxes is from fuel alone? Imagine if for one month, none of us actually used our vehicles? Many of the government plans to spend money would be down the drain, without the easy revenue generated from fuel taxes. And note, it's only plans for reality is a different matter.

Whenever the price for crude goes down, the prices will come down automatically. And vice versa. Averaged out, the Indian will still pay much lower that what we do, right now! And by paying, I am not referring only to the actual price paid for fuel, but the indirect and direct taxes as well as inflated prices for various products and services, that also contribute to the way the policy makers currently mess up the whole supply and pricing equations.

2 comments:

  1. Interesting, but anything that is so common-sensical is Certainly somrthing that has occured to the intellectuals at North Block.

    Its basically unwillingness to let go of an easy cash cow. This is easiest way to increase taxes without any protests.

    If they changed oil pricing and reduced incidence of indirect taxes on it, where would they get these thousands of crores? They would have to hitch up tax rates or (shudder, shudder) really start taxing businesses and farming...did I hear votes getting swept down the drain? Yeah, no way any government is likely to do this.

    So better get used to it - look at the bright side : we already know how....didnt we already get used to corruption and terrorism?

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  2. I agree with you Nilay, that our great leaders and economists and policy makers in Delhi and elsewhere are clearly aware about the solution.

    We have a true democracy that has been beset with all the issues that come with it, including populist policies based on vote banks.

    However, my point of contention is exactly about 'not' getting used to issues like corruption, terrorism and negative policies. We, the people who understand this need to get together and make the change happen. Or at least try. For us and for our future generations. Else, we are no better than those who make these wrong decisions, isn't it?

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Your comments are welcome. I am all ears.