Opinion The Mulayam gambit

This advice can also be extended to listening to Pranab Mukhejee.

May 27, 2012 03:27 AM IST First published on: May 27, 2012 at 03:27 AM IST

Sushma Swaraj teased Congress MPs during the Anna Hazare debate last August, saying,As it is,the PM does not speak so please listen when he does say something. This advice can also be extended to listening to Pranab Mukhejee.

Pranab Mukherjee has been saying since the Budget that he had decontrolled petrol prices and that prices were going to rise to tackle the budget deficit. Yet no one took him seriously. Now it has happened. After months of criticising UPA for inaction,the charge now is that the raising of petrol price is too drastic an action. The question however is: Is this a turning point for UPA-II?

After months of recuperation since her secret visit to New York for some medical treatment,Sonia Gandhi is back in action. UPA-II has been drifting without a doubt but the third anniversary launch and dinner showed what a strategist Sonia Gandhi is. Having Mulayam Singh at the top sharing the platform and next to her at the dinner,gave a signal to Mamata Banerjee that she was not indispensable. The gesture signalled the start of UPA-II-and-a-half. Elections in 2014 are now being planned out. The UPA coalition partners are on notice.

This is why Pranab Mukherjee could signal to the petrol companies that a price hike was on. Indeed,it is time Indian petrol consumers got used to frequent changes in petrol price as happens in their local shops and dhabas. That is what decontrol means. The reaction of Mamata Banerjee was muted because of the Mulayam gambit. She needs a lot of financial help from the Finance Ministry to cope with her debt and deficit. Pranab Mukherjee has made no hard promises. He may yet be the Congress nominee for President. If so,the bargaining will have to be with a new FM,perhaps (P Chidambaram is my guess) to whom she has not been friendly as HM. So Mamata Banerjee has been fenced in pro tem.

Of course,there is a lot of protest. It is strange how the definition of aam aadmi is so flexible. Petrol consumers,drivers of four,three and two wheelers,are perhaps in the top 10 per cent of the income distribution. How can MPs claim that the top 10 per cent of the income bracket is aam aadmi? If you take Indias per capita income as around Rs 70,000,we know that the median income below which 50 per cent live is half of the per capita income. If half live below Rs 35,000,how can they be affected by petrol price? Even if the petrol price adds to costs of transport,the effect will be marginal. If the petrol price is not raised,what then? The government has to go on subsidising the petrol company from its own coffers. Who pays for that? The taxpayer,via the government,or,through inflation,if the deficit keeps going up. The rupee has been sliding against the dollar since the Budget precisely because the Budget evaded the tough choices about debt and deficit and made others which put off domestic as well as foreign investors. The India story has been going sour at home and abroad. There is an urgency to show that someone is worried about the state of

Indias economy.

Politicians,especially if in Opposition,love subsidies; even retrogressive subsidies such as fertiliser,water (which is also ecologically harmful) and power are defended by those who want the Food Security Bill to be passed. But the time has come for India to choose among the subsidies and examine how it affects different strata by their income levels. If a subsidy helps the 300 million BPL families,by all means have it. But if it is for the benefit of the metropolitan middle class,reexamine it. In the public anger about petrol subsidy,one can see the early rumbles of just such a demand. The petrol subsidy losers ask why they should lose their perk if the money they pay is going to be wasted on useless subsidies. Maybe here is the beginning of a mature economic debate.

Can UPA raise diesel prices next? Please!