It’s time to rethink and remove income-expenditure mismatches
My nine year old toddler asked me a question. What is democracy? It was astonishing in the sense that a kid was asking about definition of a concept which has been at the centre of controversies all over the world. Actually, he was given home task to describe the concept of democracy. While explaining him the concept of democracy, I told him that people select their leaders to form government. He was quick to ask another question. Why government is formed? I told him that government is formed for the welfare of people.
Basically, I was trying to make my kid understand the true aspects of government that by all means it has to ensure the prosperity and welfare of the people. While explaining all the good things about government formation, it was at the back of my mind that I was dishonest in my statement. Since my toddler is too young to understand the complexities of democracy in theory and practice, nowadays we hardly find governments engaged in peoples’ welfare. The modern governments, most of the time, struggle more to survive than centralizing their focus on the welfare of the people.
The most recent anti-people initiative has been the unprecedented hike of almost Rs.8 in petrol prices. It’s surprising that our government drives inflation to peaks after every passing day. What has led to this steepest hike ever is the prevailing governance deficit, which has forced the government to take this kind of ‘difficult decisions’ costing convenience to the common people.
Petrol may have a small weight in the wholesale price index, but the price increase would have an impact on inflation definitely. As a developing nation we are prone to increasing trend of inflation and demand of goods and services is much higher than the supply side. This mismatch will keep the prices going up.
In the local context, the hike is going to widen the income – expenditure gap in a common man’s budget. It will be now too expensive for the people here to own a car or a scooter. The petrol price hike reminds me of an incident when one of my acquaintances was looking for a suitable price for his two-year old car. I knew that he had raised a loan to purchase the car. He was on top of the world when the keys of the car were handed to him. Actually he had sought my assistance in getting a fair price for his car. There was nothing wrong with the car. He had maintained it properly and most of the time the car remained in the expensive garage, which he had built with a touch of some modern architecture.
Why he was selling the car? He gave a reason which is a ‘real alert’ for all of us. He was lured to purchase the car when everybody in his neighbourhood was having one. Though he was not having money to buy a car, it was easy access to bank loan which ‘brought him’ at par with his neighbours. But over a period of time he was not comfortable to use his car, even when it needed the most. Reason was the expensive fuel, which was not falling now within his income limits. Even his monthly installment was a burden now as other ‘most important’ expenses knocked his routine living standard.
This incident of income-expenditure mismatch of my acquaintance was small in nature, but it carried a huge message of making intelligent estimates of the future. And I am sure, this incident may not be isolated one. In fact there must be countless such incidents in which households may have suffered financially on account of paying off payments on loan which could have been avoided. So, no matter what your current financial situation, it’s worthwhile managing it carefully.
I don’t see the hike will end here. The prices will continue to widen the diameter of the hole in a fuel tank. What we need is a conscious decision to own a car or a scooter or not?
Lastupdate on : Fri, 25 May 2012 21:30:00 Makkah time
Lastupdate on : Fri, 25 May 2012 18:30:00 GMT
Lastupdate on : Sat, 26 May 2012 00:00:00 IST
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