Fiscal deficit is killing our country… in the long run. There was subsidy on diesel to benefit farmers in India, so they could run their pump sets and generators. But today, most farmers rely on electricity, making the diesel subsidy a farce. So who is using diesel? You and me. But who is benefiting most? Proprietors of SUVs and transport firms that have become the primary users of diesel.
So how can the government cut their fiscal deficit? Stop subsidising diesel. This way, they can partly roll-back the fuel price hike announced yesterday. In hindsight, was deregulation such a good idea? It has only increased the burden on us. From Rs 8/litre of petrol in 1989 to Rs 62 in 2010-11, we have come a long way really.
My friend has a few recommendations:
1. Bring all oil companies under the government of India.
2. Have common taxation across the country.
3. Reduce middlemen and take complete control of the distribution and thereby reduce costs taken by them.
4. If this happens, you can sell petrol at Rs 40/litre if all these middlemen are removed from the game.
Makes sense, don’t you think?