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31 May 2012

Petrol Racing for Rs 100 Mark

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By Syed Ali Mujtaba


After Sachin Tendulkar 100 hundred, the next 100 that is being talked about is the prices of petrol as to when it will touch the three digit figure.


The race for this is on and the confirmation came on midnight 24th May, when the central government announced the hike of petrol prices to unbelievable Rs 7.54 per litter.
Petrol prices have risen from Rs 42 to Rs 76.35 in last three years.  The UPA government if goes by similar pace, in the next two years when it completes its term (2014), the price of petrol would certainly touch the century mark. 


Petroleum Minister Jaipal Reddy, justifying the price hike said, "India is facing the twin crisis of rupee devaluation against US dollar and a substantial increase in the international prices of crude oil. This is a global problem beyond anybody's control. There is no instant solution to the problem."


Reddy added, "Petrol is deregulated... but during certain periods, oil marketing companies were not able to raise prices of petrol, because of which they have lost massively.. Our oil companies are bleeding. Rs 2200 crore was lost only on petrol in the year 2010-11. Rs 4800 crore was lost in 2011-12 and in the last two months, a loss of Rs 2330 crore was made. This amount has not been compensated."


Government had deregulated the fuel in June, 2010 and Finance Minister Pranab Mukherjee said the decision to increase the prices was taken by oil marketing companies.


CPI (M) politburo member, Sita Ram Yechury disagrees. “The petrol price increase is unwarranted because the international price of crude has fallen. They have fallen more than the fall in the value of the Indian rupee. Hence, there is no justification saying that our imports have become expensive and prices are to be hiked,” he said, and added that the government is serving the interest of oil companies at the cost of the common man.


Tamil Nadu Chief Minister Jayalalithaa slammed the government on the steep hike in petrol price saying. “It could have been avoided by reducing the profit of the government as well as private run oil companies, reducing the tax on petrol and checking the falling rupee value.”
BJP dubbed the hike as "unreasonable." "If the Rupee is depreciated, it is not the fault of the people. It is due to wrong economic policies followed by UPA government," Party spokesperson Prakash Javadekar said.


Shiv Sena Chief Bal Thackeray was more boisterous. “In the last three years prices have been increased 16 times,” he claimed liquor in India is now cheaper than petrol.


UPA allies were also unhappy with the petrol price hike. “It is unjust and unilateral. We cannot accept the price hike burden on the people," said West Bengal Chief Minister Mamata Banerjee.


Samajwadi Party chief Mulayam Singh Yadav asked the Centre to check inflation and roll back petrol price hike.  The DMK, urged the central government to at least partially roll back the petrol price.  “The hike has imposed an additional burden on the people,” it said.


The government is unrelenting and has refused to immediately rollback the petrol price. Ruling out any rollback, Oil minister Jaipal Reddy has assured that the government will take measures to soothe impact of hike in petrol price.


Reddy indicated that there could be a reduction in petrol prices in near future seeing downward trend in international crude oil prices and hoped that center and states would reduce taxes on it. Most of the states have 20% local levies on petrol and that can be reduced, he said.


As the petrol prices canters towards Rs 100 mark, the common man is feeling its impact on daily life. Its cascading effect is telling on the markets, services and other sectors.


The prices of essential commodities have gone up, so are transport fares. There is a general resentment among the people.  How this anger would translate, is something that needs to be seen. 


 It is likely that in near future the petrol prices may be reduced by Rs 1. This projection is based on persistence of the downward trend of the international crude oil prices in the Singapore bulk market.


The government may take credit for this and placate its allies who are demanding the roll back. However, in reality, it is helpless to control such mayhem erupting every now and then.


[Syed Ali Mujtaba  is a journalist based in Chennai. He can be contacted at syedalimujtaba@yahoo.com]

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