Price rise: An open letter to the prime minister

Starting today, we shall be carrying open letters written to Prime Minister Manmohan Singh by ordinary citizens of India, the so-called aam aadmi. The issue that we want to focus on for the moment is petro price hike and the consequent inflation. Here goes the first letter:

Dear Mr Prime Minister,

I have a few simple questions to ask about the oil and gas price hike, and I hope you have some simple answers.

First, as an economist, you shall probably defend the deregulation with the popular theory that subsidies are a bad idea for certain types of goods. Well, then, why are you taxing oil and gas, and what exactly are you doing with that money?

You could have offset the recent price hike with a corresponding lowering of the oil tax. You can, in future, continue to adjust the tax rate as the international oil price fluctuates, to keep national prices constant.

Can you give me a good reason why you aren't doing this?

Secondly, if you're truly sincere about deregulation and non-subsidisation, can you explain what you are doing with all that tax money, unless you're subsidising other areas of the economy?

Behind your learned theories, does not the fact remain that you consider oil a less important, less essential part of the economy than certain other parts, and that is why you're taxing oil to subsidise those parts.

For some decades now, oil has not been a luxury item. Even the clerk who scoots to his office, or the farmer who runs a diesel pump must buy it.

Also, a hike in fuel prices means a hike across the board for all goods.

So I sure would like to know exactly which other parts of the economy you consider to be more eligible for government subsidy.

Thirdly, can you explain the reason behind the complicated scheme whereby the government chooses to present to the public the equation of oil profits and losses?

The oil marketing companies, an arm of the government, are asked to recoup only a third part of their losses by raising prices.

Another third comes from the oil producing companies, which are merely another arm of the government.

The last third is made good by the government itself, so to speak, like the thing-in itself we read about in college philosophy courses. So rotates the oil chakra, and the masses keep staring in wonderment, until they can no longer tell which is which, and are hypnotised into believing anything.

Tell me, Mr Prime Minister, should you not abolish this cartel system, and make things more transparent to the people of the nation, who have the ultimate right to know what you're doing with their money?

Try something, Mr Prime Minister -- abolish the tax on oil. Pass the deficit on to those sectors where this money would have been used.

You shall thus achieve total consistency between your theories and your practice. Fuel prices will drop to approximately half their current levels.

The inflation problem will solve itself. The nation shall sing your praise. Perhaps the luxury budgets of ministers and Members of Parliament will need to be curtailed, but what are a few hundred parliamentarians to the nation's crores?

However, I suspect I know why you won't do it. First, you won an election last year; you're safe for some years now. You're counting on the short memory of the public.

Secondly, a certain private corporation stands to make a large gain from the deregulation. It has had thousands of non-functional oil-and-gas outlets across the country for some years now.

These have not been able to do business because unlike in the United States, our government cannot yet blatantly subsidise a private company and keep a straight face.

Unless oil was deregulated, their investment would never come out of deep freeze. Mr PM, I fear that your government might have been bought.

Mr PM, hear the voice of the people. Let them decide what to do with their money. If they want to subsidise oil, then why should you stand in the way?

After all, they own the money, and you are only its steward.

Are you irked that I can question your government's integrity? Well, if you had to tie your shoelaces, you should have waited until you were out of your neighbour's cabbage fields, as the Chinese proverb goes.

Can you now blame me for thinking you've been stealing cabbages?

The writer is Assistant Professor of English, Bangabasi College, Kolkata.