The Hindu Business Line : Oil pricing stalemate

THE CONTINUING STALEMATE in the official response to rising global oil prices would seem to suggest that the burden of running the Government has fallen solely on the Prime Minister, Dr Manmohan Singh, though he is but one of the several members of the Cabinet and that the party he represents is but a constituent (albeit, a significant one) of a coalition propping the Government from within and outside. Consider the sequence of events. For more than nine months, coinciding with the flare-up of global crude oil prices, the Left parties have consistently opposed the Government allowing the public sector oil companies to raise the retail prices of key products of mass consumption. The chorus of opposition has been joined by other parties as well, most notably those whose fortunes would be made or unmade in the impending elections in Bihar. Then there is the Petroleum Minister who wants made good at the earliest, profits foregone by oil PSUs that a free market would have sustained. He, as also the Left parties, would not mind some adjustments made on the tax front. But, of course, the Finance Minister would have none of this. And so it goes on with the buck landing in the Prime Minister's lap.

Restraining the oil companies from doing what they feel are market imperatives must seem to him as opposed to the liberal principles of economic management that he holds dear. The humanist in him must also recoil from any action that hurts the common man. And if the two are to be reconciled in a coherent action plan, he must allow the deficit to burgeon and thus runs the risk of being accused of fiscal profligacy. The result is that he is faced with a paralysis of decision making on a vital question of public policy unless, of course, one is inclined to be charitable enough to describe the act of not taking a decision as also a form of decision-making, as a former Prime Minster put it so eloquently.

The country can perhaps live with the stalemate for a while and perhaps even hope that the international prices of oil will abate with the changed demand-supply dynamics as to render redundant any decision on the oil companies' request. The oil companies are not going to go under and may even make up for whatever visage of self-denial that they present now if and when an era of cheaper oil dawns. But the country is not sending the right signals on governance. Part of the problem is a skewed tax policy, which has been a hostage to political expediency in extracting revenues from the petroleum sector vastly disproportionate to its share in the consumption basket of the average household. The task before the United Progessive Alliance and its supporters is very clear. End this drift forthwith and collectively declare the stance on the question of retail prices of oil. If it has to be a reduction in taxes, as the Left demands, so be it. On the other hand, if the oil companies must be allowed to mark their prices up under the present tax regime, so be it too, but explain it to the public. Anything less doesn't behove a Government that promised to be different.

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