Why the government of India has been increasing petrol prices freely and will continue to do so in future despite common sense that it aggravates voters


A simple but tricky question – In a country of almost 120 crores people how many people do you think are directly and materially affected by petrol price hike ? Get the answer at the end .

With another round of increase in petrol price (almost 40% increase in price in last 1 year) I sat and thought as to why the government is so bold in increasing petrol prices?

Although the politicians are the biggest scoundrels on planet earth they are smart as well. Their whole life is based on to do something so that it increases their probability of getting re-elected. While trying to get re-elected they might do something which is good for common people but that is always a unintended consequence of the govt action.

Everywhere on TV and Newspapers today the biggest story is another increase in petrol price which has been raised by around 40% in last 1 year. Everybody except the Congress Party is condemning the price increase with the most vocal being the common man who uses his bike everyday .

Apparently it would seem that with elections in around 2 years from today why would government do something so blatantly against common people. Governments’ best ways to steal from people is through inflation  (http://www.zerohedge.com/article/guest-post-federal-reserve-our-policy-steal-you) and nobody will even know that it is actually almost a theft and govt can easily blame inflation to things from bad monsoon to Pakistan.

Why would government risk taking hard decision of raising petrol prices which is easily splashed across media and common people can easily understand that government is taking money from them ??

 

To understand this we need to link voting population of India to people who are actually affected materially by increase in petrol prices:

Total Population of India –  1,189,172,906 (July 2011 est.)

Age structure:

0-14 years: 29.7% (male 187,450,635/female 165,415,758)

15-64 years: 64.9% (male 398,757,331/female 372,719,379)

65 years and over: 5.5% (male 30,831,190/female 33,998,613) (2011 est.)

Voting percentage is around 50% (http://www.indian-elections.com/india-statistics.html)

Total number of voters = 64% of 1,189,172,906 (July 2011 est.)

               =  75 crores .

Assumptions

·        Voting age being 18 there will be some % of people in 64% who will not vote .

·        Some people above 65 years  will not vote

50% voting rate is equal to around 37 crores .  

Two wheelers – 8 crores (http://transport.rajasthan.gov.in/PDF%20Files/Static%20PDF/Table%209.1.pdf)

If voting rate is 50% of total eligible voters population I assume the same 50% voting rate to the owners of Two Wheelers .

Only 4 crore people in India matter for govt while increasing petrol prices because only 4 crore is the   count for people who have two-wheelers and who will vote and who are affected materially by petrol price hike.

What would the government do to rectify angering   this 4 crore people  ??

Simple it would focus on rest of 33 crore people who are easily mollified and made happy by doing things like

·        Farm Loan waiver

·        Increase the NREGA pay

·        Increase Min support prices for agri products.

·        May be even reduce prices of Diesel

·        Increase the PDS distribution

Of course the govt will be able to do any of the above by printing/borrowing more money ie reducing purchasing power of taxpayers and stealing from them surreptitiously .

P.S.- I and   government do not care for the petrol car owners to be of substantial voting group at all. Indeed if a car owner is complaining that petrol price is high the government rightly should not worry because a car owner is rich, really rich by any means you try to measure compared to vast majority of Indian.

·        Out of these 4 crore I do not know how many people  have high end bikes which cost above 70,000 because they hopefully should not mind paying a bit more for petrol to have a bike which is 150+ cc .

·        I do not know how many of bike owners are between 18 to 23 college going guys and girls who are as excited about voting as Manmohan Singh seems while he is speaking on topics like inflation and corruption .

About amitkumarblog

Will update later !!!!!!

Posted on November 4, 2011, in Banking, Economy, Finance, India and tagged , , , . Bookmark the permalink. 1 Comment.

  1. Here we go again as i had predicted that govt will blatantly keep on increasing petrol price because of my above logic . Couple of days ago they raised prices by almost 11 % or Rs. 7.50 which seriously is an atrocious price increase when in last 7 months crude oil has fallen by almost 20 % .

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