Hold Modi Government Accountable For Fuel Price Hikes

A series of fuel price hikes (12 till now) has followed on the heels of the recent assembly elections in five states. This is part of a cynical pattern of political manipulation – to freeze fuel prices in the months prior to every major election cycle, only to steeply hike prices in the immediate aftermath.  The latest hikes have brought the cost of petroleum on an average up to 107 Rupees a litre. The average cost of diesel has also risen to 99 Rupees a litre. The cost of LPG too has risen to 926 Rupees a cylinder. The Consumer Price Index (CPI), that measures the retail inflation rate, was 6.07% in February.

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has sought to justify the price hike by suggesting that the hike is no as bad as it has been in other parts of the world. This is a poor excuse as it is fundamentally misleading in itself. The price of petroleum in India is higher than all the countries in our neighbourhood and even countries with much higher per capita income like the United States.

The reason for the price hike is clearly two fold. The first is that the ‘deregulation’ of fuel prices that has allowed distributors to set their own prices. In turn the distributors express their gratitude to the BJP by withholding any significant hike in prices before major elections. The second is the BJP’s imposition of significant excise duties on petroleum and diesel. As the BJP has eroded the government’s taxation base by significant tax cuts for corporates and the wealthiest sections of India, it has increasingly come to rely on the revenue from excise on fuel.

In this context deregulation of fuel prices means the loss of control of the common citizen over the expenses on fuel. However the prices are still managed in backroom deals that serves what is being called an ‘electoral autocracy’. The free market is thus hostage to the electoral exigencies of the BJP, making a mockery of “deregulation”. It is crucial to note that the Indian government has also supposedly struck a deal with the Russian government to buy fuel at $35 a barrel, which is approximately 65% lower than current market rates. Leaving aside the ethics of such a deal with Russia when it is engaged in committing war crimes in Ukraine for the moment, the question we ask is, will common Indians experience a similar drop in oil prices? If not, then what has effectively happened is that the Government of India has squandered our own diplomatic and political capital to negotiate greater profit margins for oil companies.

The runaway inflation of fuel prices will automatically increase the cost of living by inflating the cost across the supply chain, further restricting the purchasing power of the people who are already facing the hardships of increased unemployment, poverty and hunger after two years of pandemic and lockdown. It is crucial that the government step in here and reverse its disastrous policy of deregulation and institute direct supervision of fuel prices. The reliance on excise duty on petrol and diesel for revenue leads to fuel price hikes - which means that revenue is being taken from the pockets of India’s poor. This must end. Instead, the revenue base of the government must be expanded by recovering taxes to their fullest extent from the rich.

Coupled with increasing rates of unemployment and job insecurity leading to the contraction of real wages, fuel price hikes threaten to throw the whole country into recession.  CPI(ML)’s campaign from the 7th to the 13th of April demands an end to the farce of deregulation; effective measures from the Government to curb runaway fuel prices including immediate reduction of steep excise duties on fuel; and full recovery of taxes from the rich.