Author: Editorial
Publication: The Indian Express
Date: December 1, 2005
URL: http://www.indianexpress.com/archive_full_story.php?content_id=82996
Introduction: Distorted pricing is the lifeblood
of economic crime. Even a tragic death can't drive this home
Would Manjunath have lived, after having done
the right thing, had kerosene come under a dual price regime? That's the question
the PMO needs to ask itself as it responds to a tragedy born out of economic
populism. The proposal, as reported in this newspaper, to price kerosene at
Rs 10 for below poverty line (BPL) consumers, and at Rs 20 for the rest, may
pass the political test-of doing a little bit of reform but not wholly questioning
the mythic status of subsidised kerosene. Perhaps, once the near-futility
of this compromise is evident-BPL-priced kerosene will be pilfered for adulterating
diesel-the government will use that to force through the right policy. But,
really, all the PMO needed to do was to point to its political interlocutors
the experience with the dual pricing of cereals.
BPL-priced wheat sold through public distribution
system (PDS) outlets is mostly sold to flour mills. The evidence for this
decades-long bad pricing is overwhelming. This newspaper, to give only one
example, has reported cases where PDS outlet owners have given BPL consumers
the choice between being amnesiac-"you have already taken your ration,
it's in the books"-or confronting a shuttered shopfront. Wheat shown
as sold to cardholders ends up with flour mills. Exactly the same-or perhaps
there will be a few creative variations-will happen when dual priced kerosene
is introduced. Ration shop owners' business arrangements are equally cosy
when it comes to mill merchants or fuel dealers.
It doesn't take a genius to figure this out.
Neither does it require anything more than common sense to see that the 5-litre
packs sold at Rs 50 is no guarantee against diversion. The packs can be sold
to fuel adulterators at a small premium. Buying 5 litres of kerosene for Rs
60 is no disincentive for a crooked gas station owner. That is why the petroleum
secretary's call for better security at gas stations sounds a little hollow.
How many security men-assuming they all want to do their duty-do we have?
How many sales officers while on inspection duty will get effective escorts?
How long can a honest sales officer be protected? It's like the old story
of gold smuggling. The smuggling stopped only when customs duties on gold
were brought down. Indira Gandhi's laws dealing with economic offences didn't
work. Manmohan Singh's pricing policy-when he was finance minister-did. That's
something for the PMO to remember.
