Don146;t look Left

The Left has threatened the UPA with serious consequences on two issues. One, if the UPA increases oil prices, and two, if the UPA goes ahead with sale of 10 per cent shares of BHEL. Sincere allies are not expected to use such a tone to pressure the government. The Left parties do not say that they will oppose the moves. The threat of withdrawal of support to the government has not been made explicit, yet it is always there in the posturing.

To a rational person, an increase in oil prices should not be an issue any more. In fact, the government should not be involved in the prices of oil products. The spirit behind the dismantling of the Administered Price Mechanism APM that was done in 2002 has been undermined by one petroleum minister after another. The cartel of oil companies, presided over by the petroleum minister, sets prices after discussions with the cabinet. The UPA has failed to depoliticise the price of oil products, and is now paying the price for it. India cannot have low prices of oil products when global prices are rising. Either the government will have to give explicit subsidies, or oil companies will make losses. The Left claims that letting oil prices go up will hurt the poor. But by giving a subsidy for oil products, the government will be subsidising the rich who are the largest consumers of oil.

The excuse for opposing the sale of 10 per cent of BHEL shares is that the CMP said Navratnas will not be privatised. But the government holds 67 per cent of BHEL shares. In case these come down to 57 per cent the government will continue to hold controlling shares. The company will not be privatised. Next, it is being said the money will not go to the National Investment Fund for expenditure on social sector. It will get spent by the government. The Left has a high level of mistrust of its own allies. Primary education has been one of the few areas that saw a substantial increase in spending in the UPA8217;s budget. A government which is threatened like this at every step will be paralysed. When elections come, its allies will not be held responsible for the lack of governance in the UPA8217;s time. The UPA should follow good economic policy even if it leads to 8220;serious consequences8221;. The consequences of not doing so may be even more serious.