Friday, 11 February 2011


I got a forward from my dad the other day asking all of us to bring the government to account on rising fuel prices. As comparison, the forward offered a comparison of fuel prices in Malaysia and Pakistan. It's an email that made me seethe quite a bit.

To my mind, the argument offered in that mail is not only flawed, but it is this expectation that price must be artificially controlled without finding solutions to the root problem that is dangerous. Asking the government to intervene and set an artificial price sends a clear signal to the government that it can get away with populist measures which have no long term sustainability. India saw the result of a highly controlled and subsidized economy in 1991 when we had foreign exchange reserves enough to afford only two weeks of imports. And it seems to me that we haven't learnt.

Yes, fuel prices impact a lot more than just the cost of driving your car around. They affect some of the most basic things such as food prices and the cost of public transport. It is an all round pain to have fuel prices go up repeatedly. But there is a reason that fuel prices are going up around the world consistently. The reason is the way we consume energy, especially energy generated out of fossil fuels. It would serve us better to look at how we as individuals consume energy and ask for the government to invest in infrastructure and public transport development and into research on cleaner, more efficient utilization of fuels rather than asking for price subsidies. Yes, it doesn't have the immediate impact of reducing one's expenses and hence, may seem "impractical" or "unattractive" as a solution but what about the fact that government investment in infrastructure and R&D will create new jobs, increase per capita GDP, make current fuel prices more affordable and in the longer run, reduce fuel prices as well.

So, yes I wish we'd think about the things we ask for when we protest, the results we want to see and spend our energies in getting lasting results as opposed to sending mass mailers asking for a price cut!

PS: a friend raised a valid question about taxes and the fact that the government could easily reduce those to cut fuel prices without giving a subsidy. I admit I hadn't researched that. And the conversation with him has made me start reading a fair bit on taxes. So post on that coming up soon. Hopefully, better researched this time :)


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