Beyond price rise, economic emergency hovers on India

What's in Store

- We are going to face an economic emergency of Himalayan heights and what is required is a political consensus-driven policy framework

- One estimate is that petrol and diesel prices will go up by at least 10 per cent and LPG by even higher in one go

- We need to look for alternative and renewable sources on a war footing across the country by encouraging solar, rooftop solar in particular

- The conversion facilities are said to be available in Hyderabad. Such facilities should be spread to vehicle-dense cities such as Delhi and Mumbai

- Government promises a chain of charging points. But going by the CNG pumps experience, one cannot be sure as to how quickly the charging facilities will be ramped up

The Modi Government which allowed a creeping price hike in diesel, petrol and LPG over a period under the garb of market-driven system till about four months ago, managed a status quo during the poll campaign period. Now that the elections are over and Modi-Shah combine's job is done, news of an imminent, major fuel price hike is appearing in the media through analysts' warnings

PRICES play a big role in Indian polity as parties win or lose elections based on the burden on the common man. The Congress had won the 1980 elections capitalising on the high price of onions. That was also the era when you had a Congress alternative to the ruling Janata Party and then came the TINA (there is no alternative) factor with Indira Gandhi ruling the roost.

Today's political situation is something akin to that situation with roles reversed. Now, Modi and BJP are enjoying the TINA factor. Or, at least as things stand. What happens in the on-going elections to the 5 States is something nobody can guess. Political pundits forecast a tightrope walk for the ruling BJP in all-important Uttar Pradesh with the possibility of a hung Assembly and similar situation for the Congress in Punjab.

The State elections matter not so much from the local point of view but from the perspective of the strength in Rajya Sabha, the members of which are elected by the State legislatures. That strength is important to get important Bills passed.

Let's get back to the price scenario. The Modi Government which allowed a creeping price hike in diesel, petrol and LPG over a period under the garb of market-driven system till about four months ago, managed a status quo during the poll campaign period. Now that the elections are over and Modi-Shah combine's job is done, news of an imminent, major fuel price hike is appearing in the media through analysts' warnings.

One estimate is that petrol and diesel prices will go up by at least 10 per cent and LPG by even higher in one go. That will be quite burdensome, to say the least. People who are encouraged to opt for CNG variant vehicles are already paying about 50 per cent for the gas in just one year. Vehicle owners are now faced with the TINA factor. They have to grin and bear it. E-vehicles are coming in a few numbers but their charging is still a big issue. Government promises a chain of charging points. But going by the CNG pumps experience, one cannot be sure as to how quickly the charging facilities will be ramped up.

The conversion of existing petrol or diesel vehicles into electric ones is going to be a big challenge. The conversion facilities are said to be available in Hyderabad. Such facilities should be spread to vehicle-dense cities such as Delhi and Mumbai. What about the cost? How many of us can afford up to Rs 5 lakh for the conversion? One would have taken auto loans ranging from Rs 3 lakhs to Rs 10 lakhs to buy new cars. The conversion cost is definitely going to be unbearable for quite a few, that too in the light (read darkness) of pay cuts and job losses and the delay in restoration of the pre-Covid level salaries.

At COP26, India has expressed its commitment to reduce carbon emissions by more than 45 per cent in eight years which requires all out efforts and not just symbolic gestures. The testing and scrapping of 20-year-old passenger cars are still a far cry. There are an estimated 50 lakh light motor vehicles which are over 20 years old. Replacing them is going to be a gigantic task. Can that replacement be addressed by e-vehicles? What happens to the inventory of unsold cars? Can they be converted into e-vehicles overnight? Further, how will our logistics be able to handle the near tsunami of e-vehicle charging rush. All these require careful planning. I suggest a subsidy incentive with increased battery swap facilities.

This leads to another question, whether the increased dependency on electricity while cutting down fossil fuel consumption adds to the rise in coal usage for thermal plants? We need to look for alternative and renewable sources on a war footing across the country by encouraging solar, rooftop solar in particular. Hydro power is erratic and rain dependent and wind power is yet to take off.

This is not the only challenge that the government is facing. The imminent fuel hike is bound to make the RBI's inflation calculations redundant. The 4-6 per cent inflation band, considered to be a healthy one, may go awry. Transport cost hikes are bound to give new headlines – not just from the inflation point of view, but from the political agitations and media stories. This can also impact the recovery process from the lockdown crisis. After the Chinese virus-triggered crisis, we will have the Russian-war triggered catastrophe.

The possibility of an all-round impact on the prices is hovering over us like never before. The unfortunate part is that we do not have any checks and balances system as of now on the political front. The opposition is bound to oppose the government's decisions for the heck of it, call for Bandhs and further aggravate the crisis. The Supreme Court ban on Bands does not seem to impact any political party or the government.

Trust me, we are going to face an economic emergency of Himalayan heights and what is required is a political consensus-driven policy framework. Inclusiveness and Sab ka Saath – Sab Ka Vikaas etc should not be mere political slogans. The Prime Minister should call all political parties and think tanks for discussions and the opposition must give their contributions.

Another idea for the Opposition to have a shadow cabinet and similar advisory panel and place their recommendations before the nation. Parliament and State legislatures are meant for discussing the national, State as well as the members' respective constituencies issues and not for demonstrating petty politics. It is disgusting that the presiding officers are forced to admonish the members who are all grownups. Will each of these screaming and shouting members in the House indulge in similar behaviour at their homes? Their children will ask: Pappa, what's this!

If the political parties want to go by their professed policies of Nation First, this is the right opportunity and all of us, to use the cliché, to rise to the occasion. As the Prime Minister himself says, votes will come automatically if you do good work. We need Statesmen and not mere politicians. Atal Bihari Vajpayee appreciated Indira Gandhi as Durga during the Bangladesh war. PV Narsimha Rao sent Vajpayee to the UNHCR to rebut Pakistan and strongly position India. Dr Manmohan Singh acknowledged that he learnt political skills from Vajpayee The 75th anniversary of Independence gives us the opportunity to rally together and work as a team, with a sportsman-like spirit. Let's discuss many more ways of working together during this 'Hirak Mahotsav' (Diamond Jubilee). Narendra Modi and Rahul Gandhi, are you listening?

(The author is a Mumbai-based media veteran now running websites and youtube channel known for his thought-provoking messaging)