Hiking The Diesel Price - A Laudable Step

Congrats to the Central Govt for showing the courage to hike the diesel price and curb the subsidy on LPG. These are two crucial decisions that were long overdue. 

It is very stupid to expect that the Govt will indefinitely put on hold a hike in diesel price when the international price of the commodity is on the rise. India has to import a huge quantity of oil from the international market, and the Govt is understandably bound to hike the diesel price if the international scenario forces any such decision. 


And as far as curbing the LPG subsidy is concerned, we should have the common sense to realize that subsidy is not an ideal way to keep price under control. Rather it is Counter Productive. Imposition of subsidy on a commodity might give us a temporary relief, but it is not sustainable and is bound to be withdrawn at one point of time. And significantly, more time is taken to withdraw the subsidy, more painful is the post-withdrawal impact. So it is always better to withdraw the subsidy at the earliest (if at all it needs to be imposed in the first place), right? I suppose we should have the maturity to opt for long term gain rather than momentary relief.

I know some of my friends will not like my view. Well, I have due respect for their opinions, but at the same time I am confident about my view.

The Recent Sugar Price Issue – Some Thoughts

The extreme hike in sugar price (almost Rs. 50 per kg) had become a hot topic of discussion for the Indian mass for the last few days. Everybody was shocked, upset, and (understandably) angry. Thank god that at last the price of this widely consumed food item is showing some downward trend.


I feel instead of focusing on exchange of criticisms and blame game, we should now focus on how we can prevent the emergence of such situations in the future. Taking preventive measures to prevent future crisis is more important than identifying the “culprits” of present crisis and criticizing them for their failure. Right?

So do I have any suggestion? Yes, I do, though I am not sure about its practicability. And I also do not know whether any decision to this effect has already been taken or being considered. All I can say is that I have a suggestion, and I will love to share it with everybody.

Other day in TV I found they were saying that a particular strategy of the Agriculture Ministry has largely contributed to this sugar price crisis. And that strategy is – Export when there is surplus quantity, Import when there is scarcity. (Well, I do not remember the language ad verbatim, but it was something like that).

Now, when there is a surplus quantity of a food item, then exporting a part of it is not a bad idea. After all, it is always a great idea to tap an opportunity to draw foreign exchange.

However, at the same time the Government should remember that there can anytime be an emergency situation in the country, which will result in a sudden and emergency demand for that surplus quantity in India itself. For example, there can be a drought-generated famine in a certain region of India, resulting in an overnight creation of a sea of hungry people in an acute need of food items, including that particular food item. Similarly, there can be flood in one region, with the Government facing the task of sending relief to that place. Needless to say that the relief items must include food items, including that particular food item.


Now my humble suggestion -

Therefore, I feel that whenever there is a surplus production of a particular food item, the Government must store a certain percentage of it as the Buffer Stock. And this must be made a regular practice, irrespective of how strong or faint the possibility of an emergency situation is.

Now, if there is any situation like drought-generated famine, then the Government can use the buffer stock to address the acute need of food items in the affected region.

In case there is a flood in a region, the Government can send adequate food items by using that buffer stock.

And when a food item will suffer from constant price rise due to the scarcity of that item in the market, the Government can check that price rise by reducing that scarcity. Yes, by supplying that food item into the market from its buffer stock.


So, what do you people think of my plan?