Wednesday, March 14, 2012
Railway Budget- Fare Hike A good thing.
The proposed modest increase in rail fares, is a move in the right direction. It is possible that this may cost the Minister his post, if media reports are anything to go by. Unless he is the chosen one to be the scapegoat. Keeping public utility prices unchanged for years, when input prices and other costs in delivering them are galloping, is suicidal and destroys it. Our electricity boards are in a pathetic shape, only because of free supply to so many people and below cost delivery in many states. People do not mind paying full prices for any utility, whether it be power or it be water or it be transport. Yes, a high level of subsidy can be afforded by sovereigns that have revenue collections in excess of expenditure. Maybe the OPEC countries can afford it. A country like ours, cannot progress without infrastructure. And the problem with infrastructure is that unless there is adequate recovery of running costs, infrastructure cannot be renewed or added. This is something even a kindergarten student should be able to dig. Our state and central politicians have been used to populist policies of living in denial. Refusing to hike prices for so long that the service provider collapses. Recently, when J Jayalalithaa became the CM, one of the first things that was done was revision in milk prices and bus fares. The state was looking at costs and revenues and these two hikes have been taken in stride by the people. Yes, we will have shouts and protest engineered by politicians, but people at large are not going to crib about the railway fare hike. Yes, we all hate to pay more, but inflation also puts some increasing amounts of money in everyone’s pockets. I hope the same thoughts will extend to the diesel and petrol prices. In fact, if the government were to give up a little on the exorbitant taxes (central plus state), both diesel and petrol can be sold at the same price. Lower than the current price of petrol, surely. This will also stop leakage of diesel to people driving Mercedes and Toyotas with diesel engine. The farm lobby will protest, but in reality, diesel expenditure is a small part of all other costs. Same goes for fertilisers and pesticides too. Perhaps, the government could go for a calibrated increase. The NDA had started the process of bringing petrol and diesel prices to market determined prices. Unfortunately, the last year of its term in office was destructive and it just stopped changing the prices. In fact, at that time, people had started getting used to changing prices of petrol and diesel. The Manmohan Singh government has nothing to lose. They will continue to remain in power, thanks to a divided opposition. Mid-term polls are unlikely. Let them repair the finances of this country.