As diesel prices soared for the tenth consecutive day on Monday—by what might seem like an inconsequential 8 paise per litre, but which could come like the last straw for the camel—PM Narendra Modi urged global oil suppliers to review their payment terms, so as to give “temporary relief’’ to the already weak rupee. Yes, the two sources of discomfort for India are intertwined.
Soaring fuel prices are proving to be quite the double-edged sword, lacerating the consumer at one end and leaching out the comfort from our forex reserves. Little wonder that the PM, while chairing a key roundtable comprising oil ministers and CEOs of oil majors, made a rare pitch for synergy “between the consumers and the producers”, as happens in other sectors.
India imports 80 per cent of its oil, and its purchasing power is under severe stress. When producer countries raise crude prices in tandem with each other, retail prices of oil and LPG naturally soar in consumer countries like India, he pointed out.
In what may seem like a carrot, he invited oil producers to channel their investible surplus into exploration of oil and gas on Indian shores. Beyond creating any future virtue through producer-consumer synergy, the Centre has enough reasons to be concerned about how the global oil sector behaves in the immediate term. With elections around the corner and the economy getting bludgeoned by soaring fuel prices, its concerns are understandable.
The relief that the government finally deigned to offer the suffering public earlier in the month by lowering excise duty and oil company subsidy has been almost wiped out with the recent hikes. For the common man, nothing could be more cruel than rising fuel costs and the attendant price rise that threaten to take the joy out of the festival season. The sector specialists may have their own micro logic and rationale. But for everyone else, it’s a no-brainer: The government must do whatever it takes to lower the prices that are at an all-time high. Both economic and political logic tells us so.