Fuel Price Hikes

What causes the Indian middle-class to rant on the Facebook and Twitter against the Indian Government? Yet another fuel price hike. So when the government announced a steep Rs. 7 hike in petrol prices, the Facebook is flooded with cartoons and humourous one-liners to express the cynicism against this move by the government.

(Image courtesy www.LifeSnap.in)

This creates a picture of a frustrated middle-class that is finding it impossible to make its ends meet. Assuming this picture to be correct, it makes me wonder:

• Who are the people I see every single evening sipping a lavish coffee at Barrista's or Cafe Coffee Day? I hear even Starbucks and Dunkin Donuts are planning their entry into Indian markets. Surely, they are tapping a market large enough to accommodate all of these players. Their market definitely can not constitute just the rich and the affluent.
• Every single friday, at least two or three new trashy bollywood movies are released into the multiplexes that charge tickets no less than Rs200 per head. The trashiest of Salman Khan movies are a block-buster hit. Who are the people  flooding the cinema halls despite the steep inflation?
• The list is endless - malls abuzz with people buying things ranging from the bare essentials to the lavish perfumes and ray-bans, cars choking up the city roads, rickshaws getting so many long distance passengers that they refuse to ply shorter distance passengers.

I am sure there is a vast majority of Indians who are terribly impacted by fuel price inflation but I doubt if the people venting their anger in Facebook and Twitter are amongst them. 

One statistic that is often played out is the fact that petrol prices in India are much higher than in other countries. This is true. Price of petrol (gas) in US is $4 per gallon that translates roughly to  Rs.58 per liter. But consider also the fact that diesel in US also is about $4 per gallon (Rs.58 per liter). The diesel prices in India are Rs. 46 per liter. Kerosene in US costs about Rs.42 a liter. The heavily subsidized kerosene comes at Rs.13. It is these and many other subsidies that the government has to fund in some way or the other. 

Instead of fuming and fretting over the petrol price hikes, I suggest these people to pressurize the local municipalities to do the following:

• Create a better infrastructure of public transportation. There were lot many BEST routes and much better frequency of buses once upon a time in Mumbai. Slowly a lot many of these routes have been closed down and the frequency reduced. I smell nexus between auto companies and governments behind this!
• Short distances need to be traversed either by walk or bicycles. Ask the municipality to create more sidewalks and make them exclusively available only for pedestrians and not to be shared with hawkers. Encourage people to use bicycles by providing exclusive bicycle lanes and stands for parking cycles.

Crude oil and its products are a finite commodity and the prices to some extent reflect the fact that the commodity is getting rarer by the day. Accordingly, it needs to be used more prudently. Also, the inflation signals the fact that more money is being spent rather than saved and invested. If the voracious appetite for consumption by middle-class comes down, automatically the inflation will fall.