India’s government cutting fuel subsidies raises a storm of protest

With oil prices soaring, several countries that have been subsidizing fuel to keep down gasoline prices can’t afford this irrational practice anymore. On Wednesday the Indian government announced that it would slash its fuel subsidies and thus hike gasoline prices by about 11 percent over night. The oil minister said it was a necessity as the state can’t afford anymore to spend ever more money on oil. India’s oil demand is covered for 3/4 with oil from abroad. Other countries in South East Asia like Indonesia, Malaysia, Pakistan and others were also forced to hike gasoline prices due to overwhelming pressure on the subsidy budget.

The jump in price at the fueling stations didn’t go down well with the people. Before midnight, there were long lines of cars waiting for filling up before the new pricing came into effect. Afterwards, protests and anger emerged throughout the country. Businesses and schools remained closed, severe disruptions occurred at airports and train stations and hundreds of thousands protested against the already unpopular government led by India’s Prime minister Singh. As parliamentary elections are approaching, the opposition accused the government of fueling inflation and harming the poor which have to manage on less than a dollar a day. On the other hand, Mr. Singh said that what has been done was the bare minimum and thus, he is criticized for taking too little action too late. The state-owned oil companies suffer from million dollar losses every day. Therefore, further price increases are actually necessary.

Yet, it is obvious that there is no way to keep consumer prices unaffected. With the state subsidizing fuel, the taxpayer has to pay the bill which is neither fair nor beneficial to most Indians. Besides, subsidizing fuel and thus increasing demand for fossil fuels even further in a time when the negative effects of carbon dioxide emissions are more and more visible is a scandal. Though higher prices affect most the poor, it’s the wrong way to encourage wasting this limited and precious resource. Higher prices make people reconsider the necessity of going by car and help to save fuel and energy. Consciousness for the environment is that rare in emerging countries that a high price is the only way to prevent a further explosion in demand for oil.

http://www.iht.com/articles/ap/2008/06/06/asia/AS-GEN-India-Fuel-Price-Hikes.php

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1 Comment

Filed under Economy, Politics, Uncategorized

One response to “India’s government cutting fuel subsidies raises a storm of protest

  1. Pingback: China, India and other countries subsidzing gasoline to keep domestic prices down are forced to embrace electric cars « What Matters

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