Fuel subsidy in India

Read an interesting comment from the Minister of State for Oil & Gas Mr. Jitin Prasada in today's Economic Times (Delhi -

"Those who can afford it should pay the full fuel price"

Noble thought. Difficult or maybe impossible to implement across the country. But how about implementing it for just the Government (including State Govts) and its organizations. The Govt organizations raises tenders for fuel supply for its vehicles and whosoever is the lowest bidder, gets the contract for fuel supply. So the total requirement is always known. Instead of paying the bidder by the prevailing (subsidized) market rate, why not pay the bidder by the unsubsidized market rate.
Lets see if it makes sense or not.
This news article says that the first three quarters of FY 09-10, the petroleum ministry demanded a subsidy of Rs 20,872 crore to take care for the losses of three Oil & Gas PSUs. Extrapolating the annual subsidy could be assumed to be around Rs 28,000 crore.
Govt of India have more than 50 lakh employees assuming an average of 1 car per 10 employees, the Govt will have around 5,00,000 cars. A typical govt official's car will run for around 40,000 kms per year (including transit from office to home and tours). Assuming a mileage of a 6kms (ambassadors won't give more than that). Diesel cost would be
500000 * 6700 * 36 = Rs 12060 Crores.

Difference between actual and subsidized price of diesel varies depending on the global crude price. At the price of $75 the loss for Oil companies on Diesel was around Rs 9/litre.
So if the Govt were to buy the fuel at market rate the loss of Oil companises will be reduced by around Rs 3000 Crores which is more than 10% of the annual loss.

To me this seems a good way to reduce the subsidy bill.

Power politics

The manner of disposal of complaint against Indian cricketer Harbhajan Singh for alleged racist remarks to Australian cricketer Andrew Symonds has incensed a lot of Australians. The main grouse being the way Indian cricket board (BCCI) was able to arm twist the world governing body ICC and Cricket Australia (CA) into following its lead.
With some explicit and some implicit threats of withdrawing from the tour from BCCI and its resultant financial loss to CA and ICC and not to forget Television companies, from the very outset, it was not tough to figure out that the final decision would be as per the liking of Indian team and cricket board. So I wonder why the comments now. Maybe the reality dawns on some people later than others.

I tend to sympathize and agree with the Australians who feel that the financial clout of BCCI in cricket led to the unwanted semi-withdrawal of complaint from the Australian cricket team.
But isn't it the norm in every society that the rich and powerful always have there way? Whatever space the weak get is not taken but given by the strong.
Few examples:
This article on how the rich nations which contribute most to the UN kitty are arm twisting the UN to spend in the manner in which they tell it to.
The bombing of Hiroshima and Nagasaki in WWII. Who says that the US is a bad country?

Australians, welcome to the real world!!

Indian Communists and Reliance Retail

This post echos similar thoughts as in one of my earlier posts: Pandian v/s Geetha.

Today's newspapers carry a report about the attack by members of Forward Block, a left wing party, on an outlet of Reliance Fresh (a grocery store chain owned by corporate giant Reliance Industries) in Calcutta. The outlet was still not open and was under construction when the members of the Forward Block vandalised it. When asked about the reason of this attack the members of Forward Block said that they think that Reliance Fresh is a threat to small businessmen.
What I interpret from this attack is that the communists think that it is their duty to protect the small businessmen from the onslaught of a corporate giant which is a symbol of crony capitalism in their eyes. Now I have been to Reliance Fresh stores in Noida and have found that it works on a very good marketing strategy. Sell one or two items which are popular real cheap and sell everything else a shade costlier than the market price. So a customer is attracted by the low prices on say, potatos and onions, and when she goes to buy these she invariably buys the rest of the vegetables from the store as well. Now the other vegetables are not cheap, so the total grocery bill is nearly the same as it was earlier when I bought these stuff from the small neighbourhood store. The only difference is that now I get everything from a single store and that is a huge convinience. So now, for me, it is a choice between convinience of buying everything from a single store or going around the whole market to buy the rations.

The question now arises, if I can see this, why can't the communists see it, that what stores like Reliance fresh offer is convineance and not low prices. What is wrong with letting the common man have some convineance? And since when the communists started favoring the small businessmen. They are after all businessmen who are doing business for profit and not for charity and would not deter from making an extra profit if they have a chance.

I think the communists are just opposing the corporates because it is in their nature to don't let anyone grow. They want everyone to be remain small and fight to live, not to live to fight. As I had highlighted in Pandian v/s Geetha, the communists need to look at the big picture not the small ones.