In the grim scenario of continued rise in oil prices, presently hitting at $127 a barrel in international market (on May 30, 2008) and adding yet more fuel to the prevailing fire of global inflation, the nations all the world over are facing it hard to adjust their economies to the fast-changing cost-structure. India, on its part, is on the threshold of yet another bigger challenge in that the party in power is perhaps unable to take such bold economic steps as to displease people through tax-subsidy measures since it is going to face parliamentary elections early next year, particularly after the debacle it has already faced in the Assembly elections in a number of States this year. However, the simple logic is that if the retail price of every commodity in the market reflects its scarcity situation and the cost of making it available to the consumers, why should it not at least to a reasonable measure be the case with oil products in our country.. Secondly, by subsidising petrol to the extent of Rs 20 a litre, the government is actually subsidising car owners (in the main) rather than protecting the poor. Since production from oil fields has slowed down in both oil producing nations and other countries of the world, the rising trend of oil prices will perhaps continue and India or any other developing country will be compelled to raise the prices of oil products sooner than later. Moreover, the amount of oil subsidy presently accounting for more than Rs 200,000 crore is ballooning our fiscal deficit, and the amount is not available to finance the social welfare and development programmes. This is also a big deprivation of the poor. As against this, if subsidy on oil is cut to some extent, it will no doubt push up transport cost and so the price level accordingly, but it is also a fact that the poor men's share of price hike along with the rich will be less than the benefit they will lose due to increase in subsidy