Mohammed Irshad, an economic researcher, questions the rationale of price rise in petrol and diesel while public sector corporations make a killing. Are the Indian poor subsidizing public sector profits and subsequent privatization of these companies?

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Every price rise has a reason, its nothing but cost escalation. This is a simple economic logic and there is absolutely no counter argument. However, when fit this simple logic into the day to day business of a government elected through parliamentary democracy creates some non-business confusions. The recent price rise of petroleum products signifies the importance of a government at the centre with profit. The Petroleum minister Murali Deora’s appearance in the press conference reminds us of a fact that government of India is running out of loss! If the public do not come to the rescue of the state it would face a total loss. According to the petroleum minister the government is losing Rs 70000 crore on petroleum subsidy and even after raise the price the total loss is Rs 50000 crore. Yes, our’s is a loss making government.

Thus, privatization or disinvestment is becomes an option to save the government. In fact, Indian economy is moved out of government intervention and all the financial matters are being taken in line with the interest of big private corporates. The hike in petroleum products help the private crude oil companies at great extend. The Reliance companies’ exploration at Krishna Godavari region and Essar oils retail outlets are the real beneficiaries of the hike. Relaxation of administrative pricing is the long standing demand of private companies and thus subsidy is no longer a policy tool for market economy. Yet, the question is why public has to save the government?

Managing state finance in a parliamentary democracy is becoming problematic in Indian democracy. The manner in which petroleum minister speaks indicates the depth of crisis which Indian democracy is reeling under. Party ruled at the centre and parties in opposition bench have accepted the economic rationale of price rise. The interests of the market economy are hinges up on the rights of democracy. The manner in which government justified the price rise of petroleum products and earlier disinvestment ventures were legitimised on the basis of market economy principle. The profit accumulation of a government which does not cater into
the developmental rights of the public raises the questions on the very mode of its governance policy. This is infact a direct challenge on the right to vote and representation in a parliamentary democracy. Ours is a rich economy with poor people. The country could produce some of big billionaires in the world and the income of private corporate are on rise. The profit and loss of a private corporate sector is understandable and it’s valued in terms of assets and liabilities. Yet, how to assess the profit and loss of a democratic government?

In India number and percentage of people living with poverty is a big debate, government agencies are always trying to establish that the percentage of poor are declining day by day owing to the effect of economic reforms. Again, some of the report question this figure, for instance World Bank assessment on poverty on the basis of dollar spends for essential articlespoints out that 54 percent of Indian spend one dollar per day and they are fell in the category of poor. Besides, the Arjun Sen Gupta committee has found that 80 percent of Indians are live with Rs 20 per day. If Sen Committee findings are true Indian government is a poor’s government since it is elected on the ground of representative democracy. However, nearly more than 50 percent of our parliamentary members are billionaires. In fact, in principle government is poor and governance philosophy is market driven.

Government is elected by the people, yet governance is completely off the people. If there is an inverse relationship with Government’s income and poverty i.e. higher state income results low poverty, then the arguments of petroleum minister and prime minister could have been acceptable. However, on the contrary, in India there exists a direct relationship with high state income and poverty; this is evident in the sudden increase of billionaires and social vulnerability in India. Thus a government with huge wealth is nothing to do with the prosperity of the mass.

The governance of a democratic government of India is facing very critical trail off. One of the most successful accomplishments of India’s reform is the incorporation of corporate financial management in the government initiatives. The importance of state financing for larger social development set aside for ‘state profit’. However, it does not mean that government is fully relay on mere ‘market rationale’, often state bluff on reality to get away from its economic responsibility, this is evident in the following figures, Indian Oil Companies had Rs 2949 crore profits in the financial year 2008-09, and this year the profit is escalated into 10,224 crore. The petroleum minister has not made any reference to these figures available in the government sources.

The manner in which the government justifies the price hike is similar to that of companies craving for state’s bail out package! Here the poor mass has to offer the bail out package. After getting bail out big corporate have continued its business, similarly the government will continue with its liberalization of governance business. Eventually the poor Indian’s will have a corporate government with high profit.

Thus the meaning of democracy is……..