Oil hit a record $135/barrel last week, up from $51/barrel in January 2007. Taking a longer four-year perspective, the price of the crude is up 230%, but Indian petrol is up only 35%, diesel 46%, and kerosene not at all!
Why not? Because government diktat obliges oil marketing companies to provide massive implicit subsidies to consumers that may touch a staggering Rs 200,000 crore this year. Subsiding oil consumers — most of whom are middle class or rich — makes no sense in a poor country. The Arjun Sengupta Committee found that most people live on less than Rs 20/day. But the implicit petrol subsidy for many car-owners exceeds Rs 100/day. This offends both justice and economic sense.
(Article by Swaminathan S Anklesaria Aiyar)
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http://timesofindia.indiatimes.com/Columnists/S_A_Aiyar_Oil_subsidies__socialism/articleshow/3069493.cms
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