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.
