The Hindu Business Line : Fuel pricing

“Time for quick, hard decisions on fuel pricing” (Business Line, May 21) calls for unpleasant decisions with every increase in crude oil price: From $50 to $126 and now $135 per barrel. Oil prices have been surging relentlessly and there is no stopping at that. The price is now predicted to touch $200 per barrel.

The Government is issuing oil bonds by creating off-Budget liabilities that will at best be a palliative for increasing the prices of petroleum products. This will result in heavy subsidies of petroleum products and consequent deficit-financing, resulting in inflation. The time has now come for the Government to take hard decisions not only on product pricing but also in the matter of industrial policy for the automobile sector.

With the growth of the economy, the automobile industry is booming. New models are being added now and then. The Indian cities are chocked with these cars while the infrastructure leaves a lot to be desiredThe conditions of roads are not conducive to optimum fuel consumption. More than 90 per cent of the private vehicles carry only 50 per cent of the passenger capacity.

In countries such as the UK and the US, car pooling is encouraged and there are specific measures to discourage use of private cars during the peak hours by imposition of taxes. Even the top executives of companies travel by public transport. The vehicle population on the roads is, thus, kept under control.

In effect, the entire pricing of oil products is that of subsidies which require reconsideration based on the costs. There is no reason why fuel for private vehicles should be subsidized. The prices of oil products should be deregulated to the market levels and taxes need to be moderated. There should be emphasis and expansion of public transport. Since oil is not going to last for eternity, steps need to be taken to contain consumption by exploiting alternative sources of energy such as sunlight

S. Narayan Mumbai