Some time back one of my acquaintances was questioned by his kid about the concept of democracy. Actually, he was given home task at school to describe the concept.
As he told him that in a democratic set up people select their leaders to form government, the kid was quick enough to ask – why government is formed? My acquaintance tried to make his 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 his mind that he was dishonest in his statement. Otherwise, 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 activity has been the continued steep hike in fuel (petrol & diesel) prices, that too twice in this month. These hikes have took away more than one-third of the gains that had accumulated to consumers when global rates witnessed fall in August, last year. Notably, the petrol price was lastly hiked by Rs 3.13 per litre and diesel by Rs 2.71 per litre.
In the local context, the hike is going to widen the income – expenditure gap in a common man's budget. Like in other parts of the country, petrol has become an indispensable part of day-to-day life, and we can't now imagine our life without it. Since the petrol prices are sky rocketing, it is eventually going to affect each and everything that we use in our day to day life.
Petrol hike directly or indirectly affects all the major sectors like transportation, textiles, auto, fast moving consumer goods (FMCG) etc, for manufacturing and transportation. This affects the prices of daily essential commodities which are transported on a daily basis.
Nowadays almost every one of us is planning either to buy two-wheeler or a car. The easy access to finance has only accentuated the vehicle sales. Now the continued hike in fuel prices is going to hit the vehicle market. 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. 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. He 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 going beyond his income limits. Even his monthly installment was a burden now as other 'most important' expenses were knocking his door.
This incident of income-expenditure mismatch is 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.
At the moment, I don't see the fuel hike will end here. The prices will continue to widen the diameter of the hole in a fuel tank.
So, will the steepest hike help to take some traffic off the roads?
(The views are of the author & not the institution he works for)