The petroleum products prices increase by the UPA government and the Bharat Bandh called by all the opposition parties have exposed our partisan politics once again.
The administrated price mechanism (APM) was introduced during the heydays of planning in India and its main objective was to moderate price swings in the crude oil and the petroleum products on the people of the country. It assured oil refineries and oil marketing companies a return of 12 percent post tax on net-worth. However, there was no incentive for these companies, the critics had pointed out, to be efficient in their operations as APM operated on the cost-plus basis.
The globalization of the Indian economy and the violent swings in the prices of crude oil in the recent years have made APM unsustainable. Only a couple of years ago the price of crude oil had reached $150 and was expected to go up to $200. However, the collapse of the financial sector in the western world, and the consequent recession brought down the price of crude to oil to $60/$70 range now. When the economies of US and EU recover from the recession in the next few years, the crude oil price would most likely go up again.
The Indian economy is also growing and it requires more oil to power the growth and provide a better life to its citizens. For this purpose, the Indian oil companies, both in the public sector and the private sector, have to invest millions of dollars/rupees to explore crude oil in India and abroad, and then invest millions more in refineries.
Power politics prevents sensible policy.
Dismantling of the administrated price mechanism (APM) was initiated during NDA regime in 2002 to be implemented over a six-year period. Since India imports almost 70 percent of its crude oil requirements from the Gulf countries and the price of crude oil has always shown an upward trend in the last few decades, dismantling APM is necessary to reduce energy-intensity of the economy, encourage energy conservation and reduce oil consumption in the economy. Now there is another compelling reason to implement this policy and that is to reduce the depletion of o-zone layer and the carbon foot-print and thereby slow-down the warming of the earth.
However, NDA did not come back to power to implement it. UPA which assumed power in 2004 and again in 2009 did not pursue this policy till 2010 as it was dependent on the Leftist support in the first term in 2004. Now that UPA does not need Leftist support, it sought to follow the NDA policy of dismantling APM to prevent oil companies from becoming bankrupt. Since the next general election would be held after four years, UPA believed this is the right time to follow the policy of dismantling APM and increase the prices of petroleum products.
UPA did not take into account the inflation that has inflicted undue burden on the amm admi. Increasing the price of petroleum products when the food inflation reached almost 20 percent which is now hovering above 10 percent is not a wise step at this juncture. This is why all the political parties came together to declare a bandh on July 5.
Bandh is no solution.
Bandhs and strikes have lost their utility long ago as people have seen that they do not solve the problem they seek to highlight. They are, however, legitimate forms of protest in a democracy. The courts have declared bandhs as illegal as the over-enthusiastic party members force people who do not want to join the protest.
Moreover, now that India's economy has been globalized after the deregulation of industry and the liberalization of the Indian economy by the Prime Minister P.V.Narasimha Rao in 1991, effects of bandhs and strikes are felt not merely in India but also in other countries. This would make India an unreliable supplier of goods and services.
Mahatma Gandhi who awakened Indian people to freedom used non-co-operation and civil dis-obedience to protest against the British successfully. However, he was aware of its pitfall. He withdrew his agitation in 1922 when agitators burnt down a police station in Chowri-Chowra. There was some violence again during the 1942 'Quit India' movement as well. Ever since the freedom struggle a 'hartal' or a bandh has been a weapon of protest. However, a weapon used for freedom from foreign bondage cannot be used against our own government – a government elected by the people. We have to evolve a new method of protest to suit the needs of a democratic system.
Need for constructive politics.
Many commentators have disapproved the bandh as it added to the woes of the general public. However, nobody has suggested an alternative way of registering protest. It is challenge for all people who believe in democracy and the rule of law to come up with a new mode of protest. It used to be said when there is a general election there is no need for a general strike. Since the general election is four years away, how do people or political parties register their protest without inconveniencing people? Then there is another problem. If the protest is not violent and does not disrupt normal life, it is not reported extensively in the media and it does not make any impact on the government. .
The time has come for the Indian political parties to evolve a consensus on constructive politics. A good policy or a good programme should not be given up just because it was initiated by the previous government, and in this case, by NDA. This is exactly what UPA did with the policy of dismantling APM. There has to be a consensus on promoting national interest both while leading the nation and also while heading the opposition. Both have to be done in morally legitimate ways.
It was wrong on the part of UPA not to dismantle APM in its first term as it was in the national interest. It could have brought out a White Paper on the issue to take public and the political parties into confidence and started the process of making prices of petroleum products to reflect their international prices in a gradual way.
We have to bring reason back into politics. Remaining in power should not be the be-all and end-all of politics. National interest should not be subordinated to power politics. When it started implementing the policy now, it could have consulted all the political parties and postponed it for a year or so considering the food inflation in the country.
Similarly, the opposition parties should have thought of highlighting the plight of the poor with the increase in the petroleum products with new methods of protest. They could have distributed black-bands to all to wear it on their hands to indicate their displeasure and protest. They could have collected signature of the people on a memorandum explaining why they oppose the price hike and also how to meet the challenge of increasing the price of crude oil and India's increasing dependence on imported crude oil. They could have suggested a long-term policy of promoting non-conventional energy sources such as solar power and wind power. They could have indicated why and how the country has to search for long-term solution to the need for increased energy for our growing economy. With 300-days of sun-shine in the country and many areas with strong wind, India should be the leader in solar and wind energy. The opposition should have proposed increased allocation for research and development of these energy sources.
Media, both print and visual, have lost their way as both have become sensational rather than rational and moderate. They have not added to the growth of rational argument which a nascent democracy requires. They do not take up any issue unless it disrupts life and they have no time for sober analysis. They do not give a proper picture of a problem in all its dimentions and have become too partisan. They mix up facts and comments confusing the reader and the viewer. The fourth estate has gone the same way as all the other estates – dysfunctional.
A call to all concerned citizens.
All concerned citizens and NGOs have to ponder over the issue - how to convert power politics into constructive politics. We require think-tanks who bring out papers on all national issues and mobilize public opinion so that all political parties can adopt them. Whichever party comes to power, it should be able to implement it. Energy policy, Naxal problem, empowering the poor, providing medical and educational facilities to the villages are some of the important issues which call for national policies and national consensus. This can be done by people who are above politics.
There is a need for a federation of NGOs in all major cities to come together, or the formation of a new national NGO which could bring clarity on issues and seek to evolve a consensus on the major issues. This is a challenge and an opportunity for our professionals in industry and in the academic field. Our national interest is too precious to be left to the tender mercies of politicians and their power politics. These issues affect all of us and we have to educate our masters, the politicians, and bring the national interest to the fore by involving the common citizens. Policies evolved by experts and supported by the voters cannot be overlooked by the politicians and their parties.
July 15,2010.
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