One life, two prices

Would Manjunath have lived, after having done the right thing, had kerosene come under a dual price regime? That8217;s the question the PMO...

Would Manjunath have lived, after having done the right thing, had kerosene come under a dual price regime? That8217;s the question the PMO needs to ask itself as it responds to a tragedy born out of economic populism. The proposal, as reported in this newspaper, to price kerosene at Rs 10 for below poverty line BPL consumers, and at Rs 20 for the rest, may pass the political test8212;of doing a little bit of reform but not wholly questioning the mythic status of subsidised kerosene. Perhaps, once the near-futility of this compromise is evident8212;BPL-priced kerosene will be pilfered for adulterating diesel8212;the government will use that to force through the right policy. But, really, all the PMO needed to do was to point to its political interlocutors the experience with the dual pricing of cereals.

BPL-priced wheat sold through public distribution system PDS outlets is mostly sold to flour mills. The evidence for this decades-long bad pricing is overwhelming. This newspaper, to give only one example, has reported cases where PDS outlet owners have given BPL consumers the choice between being amnesiac8212;8221;you have already taken your ration, it8217;s in the books8221;8212;or confronting a shuttered shopfront. Wheat shown as sold to cardholders ends up with flour mills. Exactly the same8212;or perhaps there will be a few creative variations8212;will happen when dual priced kerosene is introduced. Ration shop owners8217; business arrangements are equally cosy when it comes to mill merchants or fuel dealers.

It doesn8217;t take a genius to figure this out. Neither does it require anything more than common sense to see that the 5-litre packs sold at Rs 50 is no guarantee against diversion. The packs can be sold to fuel adulterators at a small premium. Buying 5 litres of kerosene for Rs 60 is no disincentive for a crooked gas station owner. That is why the petroleum secretary8217;s call for better security at gas stations sounds a little hollow. How many security men8212;assuming they all want to do their duty8212;do we have? How many sales officers while on inspection duty will get effective escorts? How long can a honest sales officer be protected? It8217;s like the old story of gold smuggling. The smuggling stopped only when customs duties on gold were brought down. Indira Gandhi8217;s laws dealing with economic offences didn8217;t work. Manmohan Singh8217;s pricing policy8212;when he was finance minister8212;did. That8217;s something for the PMO to remember.