It is true that the Congress president tried to defuse the situation by requesting the states to reduce the various levies they imposed on petroleum products and a few of them even responded positively to this request. But in retrospect, it does appear that the need for such a relief was exaggerated. Worse, the duty cuts and subsidies announced by the state governments have already put more pressure on their strained finances, threatening to widen their fiscal deficit. And a widening fiscal deficit imposes on the economy a price that more than neutralises the benefits the people enjoy from such subsidies and duty concessions.
The irony of this is that the people in general and most opposition political parties were already reconciled to the idea of a petroleum products price increase in the wake of what happened in the international crude oil markets in the last one year. Most likely, they may have been a little puzzled by the UPA government's inaction in spite of the fact that international crude oil prices more than doubled in the last one year and the state-controlled oil marketing companies in India went into the red as they were not allowed to raise the prices of petrol, diesel and LPG even once in this period.
This was clearly the Congress leadership's political failure in correctly gauging the public mood on the oil prices front. Political parties that fail to assess how the people and the opposition political parties would react to a decision taken by the government need to do some serious introspection.
Did its senior leaders get any feedback from the party members at the grassroots on this issue? What kind of feedback, if any, was that? Why were only a few ministers and the Prime Minister keen on a quick decision on a price increase? And why was it necessary for the Prime Minister to address the nation on the day the decision to raise oil prices was taken? That was perhaps the first time that a Prime Minister had to address the nation on the occasion of an increase in the prices of petroleum products. Finally, why were there so few Congress leaders publicly defending the government's decision on oil prices?
These are questions that the Congress party's think tank must grapple with in the days to come as it approaches the forthcoming elections. It is as important for the Congress to assess the public mood correctly, as it is to ensure that all its ministers act as a group that believes in the collective responsibility of the decisions taken by the government. Unfortunately, that is not the impression the UPA government has created in the last four years. Once a decision is taken at the highest level, all ministers and political functionaries of the ruling party must bat in defence of that decision, be that the increase in oil prices or the proposed Indo-US civil nuclear deal.
In 2002, the state government of Delhi under Sheila Dikshit decided to privatise the distribution of power in the Capital city. In place of the dissolved Delhi Vidyut Board, she handed over the power distribution business to three private companies. The Sheila Dikshit government came under attack from the opposition political parties, led by the Bharatiya Janata Party. But she stuck to her decision and the Congress leaders stood by her. Problems arose but these were also being resolved by a team of bureaucrats that her government had put in place.
Sheila Dikshit had got her assessment of the popular mood right. Delhi's citizens were disgusted with the poor quality of power distribution. They wanted better service even if that meant a higher tariff. Her game plan was to offer better service by keeping the tariff unchanged for a period of five years. She was fortunate that her decision received the full support of the Congress party. Today, six years after the power distribution privatisation in Delhi, no political party has the courage to question that decision of Sheila Dikshit. In fact, it is a decision that has yielded rich political dividends for her.
The UPA government's long-term policy on oil prices is now being discussed by a high- powered committee. The success of that policy will depend largely on how correctly the committee gauges the ground reality and how well its prescription receives the support of the UPA's political leadership.
