Tuesday, June 03, 2008

Subsidising Regression

Cost of the Chennai's MRTS: Rs.1,000 Crore (over 20 Years)

Cost of Delhi Metro: Rs 10,500 Crore (over 10 years)

Cost of National fuel subsidy: Rs: 200,000 Crore (in 2007-08 - 1 year)

Considering a Bus costs Rs.0.25 Crore approx and the subsidy on petrol is Rs 15/litre (A bus for every 1.6Lakh litres petrol subsidy!)

It's obvious that the government has frittered away a lot of money to prevent a possible loss at the next general elections. While the MRTS and the Metro have been dubbed as part failures because their patronage is not to their full capacity (where again the blame lies with the governments) imagine we could've had Metros across all our major cities and MRTSs across all other major towns and cities and thousands of buses for the whole country just with this year's fuel subsidy.

One of the UPA government's biggest mistakes was removing the Administered Price Mechanism of the NDA which made changes in cost of petrol a mathematical process rather than a political decision. The best news I've heard in this regard has been that the national petroleum companies have started rationing fuel and their impending bankruptcy and closure within a few months if the fuel price subsidy is not removed/rationalised. When that happens, it'll be doomsday for the UPA and a lesson for all selfish power-hungry politicians who come to power in the future.

If the government can afford so much on short-term subsidies they can definitely afford better public transport for all of us.

If people can't afford to pay for the true cost of fuel, they can't afford the true cost of damaging the environment either!


kiranjith said...
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Dr Rajshekher said...

Prahalath, ur comments r pertinent...but v need to remember that the economy is run by the subsidised fuel...if cost of fuel rises high with removal of subsidies, the worst hit will be the common man, and the road-side vendor who depends on supply from trucks, and so on...livelihoods of a massive no. of people is dependant on these subsidies...many businesses would fold up...and these r not unique to india either! Fuel is several times more subsidized in the US. But there, the populace is more knowledgeable, so they r not sold out to populist policies! In India, now everything is being made free...free power and so on! Seats in govt colleges are already subsidized (read reserved)...this is not altogether such a bad thing...provided this cuts into the money they usually make as kickbacks..i think if all the black money were to be pumped back into the mainstream, then the economy would run without too much problem, but then all the rich people would become paupers, and v may end-up having our own civil war and revolution!

Prahalathan said...

Petrol is not subsidised in USA. They produce it / drill oil in their own country so it's cheaper.

Same way rice is cheaper in our country because we produce and export it.