Diesel needs to be dearer still

  • 30/10/1999

F inally , the government has decided to hike the price of diesel. The timing was politically right. There was no political cost attached to it. As the last round of polling ended and the counting of votes began the government decided to act. The price of diesel went up by Rs 3.50 per litre. A substantial increase, but one long overdue. The international price of diesel had gone way above the domestic price of the fuel for more than three months.

It was a political decision to delay the announcement of the hike. It was one born out of political necessity: the forthcoming election. This merely shows that the government, no matter which political party is in power, will never have the courage to take a harsh, strong stand on diesel. There is a reason for this. The political parties fear that the transporters' lobby and the automobile lobby, which is increasingly getting into diesel, will be adversely affected and, in turn, will affect their votes.

As such, national interest is sacrificed at the cost of political interest. No opposition party will ever raise the issue of diesel prices being made dearer or a special tax being imposed on diesel to pay for the health care costs incurred by the government and individuals due to rising air pollution. And air pollution is not a problem confined to the large metropolitan cities of India. Small towns and cities also suffer from this malady. In fact some of them have even surpassed the capital and can be termed Delhi's dirtier cousins. One important factor in this alarming rise in air pollution is the warped fuel pricing policy of the government that promoted the use of diesel in urban areas, including in three-wheelers with obsolete engines.

Having a sense of political survival makes sense, but it cannot be pardoned as it amounts to slow murder. Perhaps the price of diesel is now at par with the international price. But it is still not taxed and the price gap between diesel and petrol remains very high. Policymakers normally justify this by saying that the movement of goods and essentials may be affected in the country by taxing diesel.

But one thing is very hard to understand. Why can something not be done to curb the dieselisation of the private small vehicle fleet? What national objective does it meet? How will fiscal measures to deal with it affect political or economic gains? The answer is simple: in a

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