Not sure if this will be an economically sound argument... but ....
V.Krishna Ananth
The month-long celebration of football that began on June 9, 2006 must have shut my mind to all other developments, including the political events. Football, to me is a passion larger than politics and the FIFA World cup season is a time when I realise the importance of TV sets. I have not missed a single match since 1986 and am determined to stay awake night after night until July 9, 2006 until I watch Cafu, the Brazilian captain lift the cup for the sixth time.
This FIFA tournament is important to me also because I do not expect Roberto Carlos play for Brazil in 2010. He will grow old by then. In the event Brazil manages to lose matches, I would like Argentina lift the cup. And the much hyped England is eliminated before the Quarter Finals begin Friday, June 30, 2006. France will get out of the tournament even before that and this was evident after watching them play so badly against Switzerland.
Well. Let me stay clear of my obsession with football for a while and steer my thoughts to more mundane things before us. The agitation by the Left parties against the hike in prices of petrol and diesel raises a set of important questions.
One: It is plain dishonesty for the Left parties to gather their cadre on the streets against the decision of a Government that survives on their support. And if the leaders of the CPI(M) and the CPI think that the people will be fooled into taking them seriously in the same way their cadres do, they are sadly mistaken. The people of this country know too well that Manmohan Singh will remain Prime Minister only until the moment the Left parties continue to support his Government. And Manmohan Singh too knows this well as well as the fact that the Left party leaders will only bark and refuse to bite.
In other words, the Prakash Karat-A.B.Bardan duo will continue to lend support to this Government and will do that unconditionally. The agitation against the fuel price hike, hence, is only a theatrical performance meant to convey to the Left cadre that they will continue to be engaged in the agitational mode!
There is then the larger issue. The fact is that India depends heavily on imports for its fuel requeirements. And the liberalization era has only increased this multi-fold. The number of cars and motor cycles in our towns have grown several fold in the decade after 1991. Apart from the new car and bike factories, the liberalization model pushed into the society a culture where owning swanky cars and expensive bikes were made into necessities for the urban middle classes. This, in a sense, saved the Indian state from being attacked for its failures in the public transport sector.
And this increase in the number of private cars and motor-cycles meant increase in the consumption of petrol and diesel. The consequence of this being an increase, by many times, in the import of crude oil. And where the prices of petrol and diesel are kept low by way of subsidies, the increase in the import of crude meant proportional increase in the subsidy bill too. In other words, the state began subsidizing the pleasure rides by our rich on the six lane highways and the rides by our fun loving youth whose parents had the money to keep their children happy by getting them bikes and small cars.
Now, this high subsidy bills meant cutting down on expenditure elsewhere. This could be public health, education or rural roads. Nationalized Banks today lend money to buy cars rather than on agriculture. And herein lies a moral problem that the Left must address. In other words, while it is true that fuel price hike will affect the poor more than the rich, there is no way that a regime where the rich are subsidized to enjoy pleasure rides can be allowed.
The Left will have to raise this issue in real earnest. In other words, those who own swanky cars and expnsive bikes should be asked to pay a monthly or annual cess that will be sent into the oil pool account and subsidise petrol and diesel. I remember this argument placed by the Left long ago when they were sustaining the UF Government under Deve Gowda.
And in doing so, the Left must place this as condition for their support to the Manmohan Singh Government. This will have the desired effect rather than such street shows of courting arrest and getting off the police vehicles soon after to address press meets and issue empty threats against the Government.
Meanwhile, let me continue with my obsession for football!
------------
V.Krishna Ananth
The month-long celebration of football that began on June 9, 2006 must have shut my mind to all other developments, including the political events. Football, to me is a passion larger than politics and the FIFA World cup season is a time when I realise the importance of TV sets. I have not missed a single match since 1986 and am determined to stay awake night after night until July 9, 2006 until I watch Cafu, the Brazilian captain lift the cup for the sixth time.
This FIFA tournament is important to me also because I do not expect Roberto Carlos play for Brazil in 2010. He will grow old by then. In the event Brazil manages to lose matches, I would like Argentina lift the cup. And the much hyped England is eliminated before the Quarter Finals begin Friday, June 30, 2006. France will get out of the tournament even before that and this was evident after watching them play so badly against Switzerland.
Well. Let me stay clear of my obsession with football for a while and steer my thoughts to more mundane things before us. The agitation by the Left parties against the hike in prices of petrol and diesel raises a set of important questions.
One: It is plain dishonesty for the Left parties to gather their cadre on the streets against the decision of a Government that survives on their support. And if the leaders of the CPI(M) and the CPI think that the people will be fooled into taking them seriously in the same way their cadres do, they are sadly mistaken. The people of this country know too well that Manmohan Singh will remain Prime Minister only until the moment the Left parties continue to support his Government. And Manmohan Singh too knows this well as well as the fact that the Left party leaders will only bark and refuse to bite.
In other words, the Prakash Karat-A.B.Bardan duo will continue to lend support to this Government and will do that unconditionally. The agitation against the fuel price hike, hence, is only a theatrical performance meant to convey to the Left cadre that they will continue to be engaged in the agitational mode!
There is then the larger issue. The fact is that India depends heavily on imports for its fuel requeirements. And the liberalization era has only increased this multi-fold. The number of cars and motor cycles in our towns have grown several fold in the decade after 1991. Apart from the new car and bike factories, the liberalization model pushed into the society a culture where owning swanky cars and expensive bikes were made into necessities for the urban middle classes. This, in a sense, saved the Indian state from being attacked for its failures in the public transport sector.
And this increase in the number of private cars and motor-cycles meant increase in the consumption of petrol and diesel. The consequence of this being an increase, by many times, in the import of crude oil. And where the prices of petrol and diesel are kept low by way of subsidies, the increase in the import of crude meant proportional increase in the subsidy bill too. In other words, the state began subsidizing the pleasure rides by our rich on the six lane highways and the rides by our fun loving youth whose parents had the money to keep their children happy by getting them bikes and small cars.
Now, this high subsidy bills meant cutting down on expenditure elsewhere. This could be public health, education or rural roads. Nationalized Banks today lend money to buy cars rather than on agriculture. And herein lies a moral problem that the Left must address. In other words, while it is true that fuel price hike will affect the poor more than the rich, there is no way that a regime where the rich are subsidized to enjoy pleasure rides can be allowed.
The Left will have to raise this issue in real earnest. In other words, those who own swanky cars and expnsive bikes should be asked to pay a monthly or annual cess that will be sent into the oil pool account and subsidise petrol and diesel. I remember this argument placed by the Left long ago when they were sustaining the UF Government under Deve Gowda.
And in doing so, the Left must place this as condition for their support to the Manmohan Singh Government. This will have the desired effect rather than such street shows of courting arrest and getting off the police vehicles soon after to address press meets and issue empty threats against the Government.
Meanwhile, let me continue with my obsession for football!
------------
posted by Krishna Ananth at
4:44 AM
3 Comments:
if we are talking from the 'economics' point of view...it doesen't fulfil the condition of pareto optimality. that is..a situation is said to be pareto optimal if you cannot make even a single person better off by not making someone else worse off. so we decide on welfare measures accordingly, but then again..a pareto efficient situation can be perfectly disgusting as we could have a society with extreme inequality and no redistribution will take place only because it would make some of the richer people slightly worse off than before. so one can easily counter the pareto efficiency argument in these conditions.
so then in that case your suggestion holds good, although i do expect a few, " why are the rich being penalised for being rich" kind of arguments for this post of yours.
as for nationalised banks lending more to the richer middle class for their purchase of cars and bikes as opposed to farmers..well, the thing is that a lot of these banks are already in the red with a sizeable proporation of Non Performing Assets. now obviously any sane banker would actually look at the credit risk of the individual he is lending to. and farmers in a country that is sustained on rain fed agriculture (let's actually talk only about small farmers here coz' they are the majority who actually need credit) are not the ones who have a good credit risk. and often enough they are eliminated from the process altogether as they do not have sufficient collateral to offset the risk. which means in order to make farmers inclusive to the process of formal credit albeit at lower rates of interest..we have a strong case for land redistribution aka land reforms.
the point in either way however is that now that we chosen to follow the dictates of the market economy, we have to follow it up with policies that makes it a more inclusive process and yes of course to ensure the sustained growth of capital.
I realise that economics will have to be done with the same sense of purpose (as a course) rather than sitting through lectures (by eminent academics) when you do not have anything else to do.... And I was only a visiting student in eco classes... thank you vibha...
the drawback in that however (as i have seen in several students) is that they only end up doing it as a course...and forget as one of my professors once told us in class, "Man is the centre of any study"
p.s i simply love your blog!!
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