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The Saga of increase in petrol prices and lollipop of subisdies given by congress

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The congress party of India put a graph in reply to BJP’s claims of percent increase in diesel-petrol prices with increase in global crude oil prices. Since then a lot of hoohaa has been done on oil price rise.

The BJP IT Cell is considering only one factor percentage increase in oil price while Congress analytica seems more interested in Global Crude oil prices as parameter. However there is one more significant factor which the Lutyen’s intelligentsia so willfully ignores, subsidies given on oil prices.

Let’s break down all 3 main factors. Global crude oil prices, percentage increase in Indian prices and subsidy given on the fuel. Also for parallel analysis for effects on oil phenomena, another factor Fiscal deficit which is basically measure of expenditures of the government minus it’s generated revenue will be considered in this analysis. The lower the deficit the better it is.

In 2009-14 the global crude prices increased by 84 percent. UPA increased prices of petrol by 75.8 percent. Exactly in the same period the subisdies given on petrol was Rs 5 per litre. It will be close to 13 percent subsidy given on petrol on prices of 2009. So basically, if all the three parameters are positives and negatives the final score of UPA is +4 percent.

This incurred a loss of 40000 crores to Indian oil companies. Fiscal deficit rose to an alarming 5.8 percent. P Chidambaram then formed a committee as a measure of course correction. Kelkar committee warned government to remove subsidy on diesel.

The Modi government removed the subsides acting on Kelkar’s report and during its tenure of 4 years petrol prices increased by 13 percent. 34 percent decrease in crude oil prices. So score of BJP is +11 percent. Both are almost comparable with one more year in BJP’s kitty to improve it’s performance. UPA fares better than Modi’s by 7 percent.

While UPA did deregulate petrol wisely it failed severely in diesel.


Now during the same time 2009-14 UPA increased prices on diesel by 83.7 percent. Global increase was 84 percent. And subsidies given on diesel was 13.55 per litre in 2012 according to an analysis by IISD. Taking 13 Rs per litre, ie. almost 43 percent of the price in 2009. So basically score of UPA was +42 percent. According to an analysis in Indian Express diesel alone has effect of 4.7 percent in inflation and inflation stood at record 7.48 in December 2010.

While with same global parameter i.e., decline of 34 percent increase of 28 percent by Modi government and no subidies. The score of Modi government on diesel is much much better at +6 percent. Modi government fares better than UPA in terms of diesel.

Modi government also paid few instalments of that 40000 crores worth of loss incurred by UPA. While UPA also gave subsidies on kerosene oil of 28.5 rupees. Kerosene was cheaper than mineral water and hence led to the rise of Kerosene Mafia, a problem with which the Indian populace is still suffering from. In that period of 2005-2014 the UPA government issues oil bonds of 2,48,000 crores. This in total has made the Modi government pay back the amount taken in oil bonds worth 2 lakh crores and rest to be paid in 2022. Who paid the same money? The Modi government? No. It’s just a decoy. It is the tax payer population of the country that had to bear the brunt of Congress theatrics. At the same time Modi government was able in successfully maintaining an average fiscal deficit of around 3.8.


India’s ultimate goal to have a strategic petroleum reserve that provides 90 days of net import coverage is another Brahmastra that is being kept hidden willingly by the Chaiwala. It is surprising as well as shameful for us that Chinese dailies like Global Times and Russian news portals like Sputnik have done series of major articles on India’s newly built oil reserves while our mainstream media is silent like the Sen’s Nalanda library on the issue. The government has already constructed underground rock caverns for storage of 5.33 million metric tons of crude oil multiple locations across the country at Vishakhapatnam and Mangalore while Chadikhol and Padur are initiated. These now increase the capacity of 22 days worth of oil in case of emergency situations like global meltdown and wars.

The Modi government’s recent boost towards Ethanol blended Petrol to 10 percent and a bid to make good use of countries resources like sugarcane and in an attempt also provide right price to the debt laden sugarcane farmers is another commendable step.

The data is out before you. The arguments are out before you. It is for you to judge who is trying to create a better future for your children and the nation and who has cheated you out by giving lollipop of subsidies. You can take a lollipop eat it up. But nothing in this world is free. You have to pay for it in the end.

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