Wednesday, June 04, 2008

Where does Chindu's loyalties lie?

The UPA government has decided to bite the bullet and implement a price hike on petrol, diesel, cooking gas etc. It was unavoidable given the rapid growth of fuel prices across the globe. Given the political compulsions on one hand and economic reality on the other the UPA government has taken the plunge in hiking the prices at least for the short term.
Chindu as usual does a cautious analysis of the situation gives the hike a lukewarm thumbs-up.
It offers support to the RBI move to provide support to the oil bonds offered by the government.
In a welcome move that should address one of its principal shortcomings, the RBI has agreed to provide liquidity to these bonds.

Realizing the ground realities and lack of realistic alternatives, short of finding a huge oil field under Anna Salai, Chindu offers its cautious support to the UPA government's fuel hike.
Though its individual components can be faulted, the latest package as a whole is perhaps the only practicable solution to the unprecedented oil shock.

But Chindu's political masters the CPM had their knives sharpened for this occasion and has decided to stab the Government after days of threats. The Left parties in what has become their routine decide to protest without supporting the government or offering any constructive criticism.
It will be interesting to see how the Chindu will react to this development and whether they eschew logic for political loyalties. All in all, its a lose-lose situation for the common man.

18 comments:

Anonymous said...

Expect NaxalR to write another editorial criticizing the hike and then try to reconcile the two opinions through some brain-dead reasoning!

RM said...

Would Chindu have written a similar editorial had NDA been in power?

Pilid said...

Believe it or not, Chindu was actually softening its hardcore leftist stance close to the 2004 election. The same was also true with Frontline editions at that time. They seemed to believe that the pomp and show put up by the BJP ('Shining India') would actually be successful and thought that India had actually moved to the right (even if not to embrace the BJP). The moment the BJP failed and the Left won a major seat share, the paper swayed even further towards the left. That has remained the case till date.

Pilid said...

Check out the letters to the editors today. Some ideas are really funny.
Judish Raj - Another thing I fail to understand is why the petrol prices should be the same for everyone. Why can’t they be structured according to the vehicle in which the fuel is used?

Hmmm.....Does Mr. Raj realize what an administrative nightmare that would be?

Purnachandra Rao - If increase in domestic prices is the only solution to meet the increasing oil bill, what is the need to have financial wizards at the helm of affairs?

Someone ought to tell Mr. Rao that wizards manage money, not print it.
If it is not there, it is not there. It is as simple as that.

B. Thiagarajan - The hike in fuel prices is untimely...Will his Ministers henceforth travel in their vehicles at their own expense? If every Minister and his or her subordinates do this, one can buy fuel prices at nominal rates.

Untimely? When exactly does Mr. Thiagarajan want the prices to go up? When the oil companies have already died an unsung death? And how much does he think will be saved by Ministers traveling in their own vehicles? I suppose Mr. Thiagarajan did poorly in his math tests in college.

The rest are about the impact on the common man. Obviously they do not realize that not increasing the prices would be even more detrimental to the common man who would end up subsidizing a larger consumption through payment of taxes either today or tomorrow (i.e. bonds).

Pilid said...

Check out the news coverage on the reactions of various parties to the oil price hike today. The Left's protests get prominent coverage (here and here) with a verbatim repetition of their statements, no questions asked. The BJP's response on the other hand is covered with far greater skepticism. All the uncomfortable questions that the BJP refused to answer are printed in detail. Why does the Left's demagoguery not face a similar challenge?

Anonymous said...

Instead of enacting a drama of Nationwide stirke (May be a couple of street corners), they can simply walk out of the government...

sr said...

Another arrogant article packaged in a genuine concern wrap in Chindu by Tarun Das of CII. While Chindu regularly publish the borrowed stories from Xinhua on China super power status and development status), the Indian national daily title the article as "Is India a superpower of poverty? ". TD even feels the title is appropriate for India. Nothing can be more shameful than it comes from someone who is considered as movers and shakers of Indian industry.

Why sudden awakening to the poverty status? Just because elections are in the offing? TD makes a remarkable wish : poor should not remain poor. Agreed. May we ask, what did YOU do to alleviate? Why don't you be a volunteer other than giving general hallow advice?

socal said...

"Where does Chindu's loyalties lie?"

Duh! Should be a no brainer. At least after so many posts demonstrating precisely who it is loyal to.

Anonymous said...

PILID,

while it could generally be conceded that the Oil prices are a international problem, it would be qqorthwhile to know what the present dispensation has done to mitigate the problem- precious little. They are not there merely to react to the reality and commiserate about it. And even then there are a lot of things they have done in terms of removing all political implications in timing their decisions just after the b'lore elections, lack of coordination between the centre and the states, with the states seemingly making it look like they are addressing the Aam aadmi by effecting some sales tax cuts, etc. Why could they not have confabulated to come out with a refined pricing. Also, what is their answer if the prices go up even further? will they come with these knee jerk solution once again and the PM address the nation as though a grave problem has arisen.

Surely the things they could have done are to anticipate the problem of rising oil prices, provided ways and means in the Budgets, proactively taken measures to insulate the prices to a larrge extent, give a roadmap to the citizens of India of the impact of the oil prices, etc. We could count endless measures that could have been taken by the dispensation. Like for instance, why cannot the oil companies move into the future markets for oil. Yes, I know it is a risky proposition but at this point in time, these companies, which were faced with huge operational losses could have augumented their resources, cut thier losses by taking a possition in the futures market and taken a huge profit given the fact that the world market percieves only an increse in oil prices. Surely other companies have taken position in the commodity markets and the futures markets and the Oil companies would not be the only ine to take such a position.

I think on balance, while the price hike is warranted, it is more due to the clumsy handling of the issue by the present dispensation more than the external scenarios, to which the FM does not miss a day, alluding to.

AND incidentally, I am not the B.Thiagarajan, whose letter has been published in CHINDU. They have long stopped publishing any of my letters as all my letter will always have a bias for anti Communism.

S.Thyagarajan.

Dirt Digger said...

anon #1,
I agree, probably early next when the LiC has analyzed the full impacts of the price hike he'll give a sermon from the mountain.

Dirt Digger said...

rm, Pilid,
The Chindu is not exactly a fair weather fan but rather a committed card holding commie.
Its pro-NDA stance was probably a slight hedge against the changing fortunes, but appears to have not been noticed by its current masters.

Dirt Digger said...

Pilid,
the letters to the editor often are written by some of the staff members just to buttress Chindu's opinions.
If you analyze the tone, grammar and contexts used across several days you can see the common pattern being used.

Dirt Digger said...

anon #2,
You are right the Left will walk out, but only after giving the UPA the death by a thousand cuts.

Dirt Digger said...

sr,
Thanks for pointing out Tarun Das' article. i'll review that and get back.

Dirt Digger said...

Socal,
Thanks for your witty repartee.
It was exactly for this kind of answer that the question was posed :)

Pilid said...

Thiyagarajan,
Oil companies have been prevented from benefiting from the increased global oil prices by the government. Even if they did gain some added benefit, the amount we import far exceeds our domestic production. Given these facts, I am not sure I understand how entering the futures market would insulate them from this reality.

Could the government have done something? Some have suggested that the oil prices ought to have been linked to the international rates a long time ago and its failure to do so is a case of missed opportunity. Yes, that may sound correct in retrospect but if the NDA government was not bold enough to do that, can we seriously expect the UPA, with the Left supporting it to have done it? I doubt it. If the government had cut subsidies at that time, you would have heard a sharp outcry even then from all parties that the hike was unjustified and the government was coming down hard on the poor.

Could the government have done anything at that point of time? It could have begun a serious push towards alternative fuels but it is too much to expect that when other countries in the world have not yet come up with serious alternatives, we would have successfully done so by now. The fact remains that the best incentive for a move away from oil is a premium on it.

As for whether the Union budget could have made provisions for the rising oil prices, that brings us back to the question whether tax-payers' money ought to fund the oil account deficit at all in the first place. It encourages profligacy and is fundamentally bad economics. No serious economist has actually supported the idea of artifically keeping oil prices low through subsidies. If prices continue to rise and the government still keeps to the existing strategy, it is a sure loser for everyone concerned.

Pilid said...

DD,

I think that the reason for the similar grammer and style in the letters to the editor is because they are all heavily edited to fit that style before being published. I have written letters to the Hindu in the past and when they actually get published, I can barely recognize my own writing. The editing is usually honest - they do not actually change the meaning of what you say but all the sting in it is usually removed and replaced with bland statements that make for far less interesting reading.

Anonymous said...

Pilid,

It is fundamental economics and commercially prudent for any company to insulate them from the vagaries of the price movements, where they cannot actually control it. You would note when the ruppee was depreciating against other currencies, all the exporters would take a forward cover of their export billing with a view to mitigating their loss exposure against a rising forex.

Surely the oil companies could have done the same against the rising commodity prices. Infact quite a few pundits feel that the present runaway prices of crude oil is closely connected to the futures market dealing.

Infact one could hazard a guess that very influential individuals, including politicians, are using the information available by virtue of thier proximity to the oil industry for their personal gains.

Second, it is not always reasonable to compare CON gress performance with the BJP led NDA. this outfit was in power for all of six years and definitely cannot be a benchmark for all future performances. I think all of us are being made gullible by the present dispensation, which seems to be perversely trying to get even with the oppossition. I can understand if the NDA placed all thei ills of the Country at the feet of the CON gress as as they have (mis) governed the country for a majority of years.

Even then when the NDA was governing the Country, crude oild was still at $30 or therabouts and the futures on commodity was almost non existent or was operated by a select few.Threfore what the NDA did not do could not be a bais for UDF taking shelter for its inactivity.

As far international price of oil products is concerned, CNN IBN has given comparative prices of international prices and the indian price is way up there.

Chidambaram in his diatribe today against the ?BJP seems to compare the stats of the present government with the perevious NDA. Why cant he do it with the earlier CON gress governments?

Thyagarajan