Will the Oil Price Hike Help or Hinder the Government?

For a party and government which seem to have become temperamentally averse to taking risks and offending allies, the Congress and the Manmohan Singh government have taken an uncommonly bold step in hiking the fuel prices.

In taking this controversial decision at a time of inflation and electoral setbacks, what are the factors which may have influenced them ?

For one, the government must have realized that it could not go on swimming indefinitely against the rising tide of world oil prices without driving the oil companies towards bankruptcy. 

For another, it knew that the interregnum between the Karnataka poll and the Madhya Pradesh-Chhatisgarh-Rajasthan-Delhi-Jammu and Kashmir elections was the only small window of opportunity which it could utilize for such a patently unpopular step.

It couldn't also have taken great wisdom on its part to know that the decision would face opposition from within and outside the government. That the Left and the Bharatiya Janata Party (BJP) would line up on the same side of the fence, as on the nuclear deal, was no surprise. 

In India, opposition is nearly always for opposition's sake without a look at the rationale for the measure. As such, it didn't take long for a Congress leader, Priya Ranjan Dasmunshi, to criticize the Left-BJP move as politically motivated. 

But of greater worry to the government is the unhappiness expressed by allies such as the Rashtriya Janata Dal (RJD), which has compared the hike to a death warrant for the ruling United Progressive Alliance (UPA) at the centre. Only the Nationalist Congress Party (NCP) has stood by the government, presumably because it shares power with the Congress not only in New Delhi but also in Maharashtra.

Apart from the obvious economic compulsions, what are the less evident political reasons which guided the government? 

It is not impossible that a feeling has been growing in the government that it was being pushed around far too much by its Left allies, which have very nearly succeeded in scuttling the nuclear deal and stalling the economic reforms. Since the government cannot expect to move forward on the deal without expecting a formal breach with the government, it may have seen the oil price hike with a greater sense of inevitability about it as the only step it could afford to take to show the Left its place. 

The government also knows that the usual strike calls by it by will get the whole-hearted support of the state government in Kerala but only a formal one in West Bengal where the Buddhadev Bhattacharjee government is wary of any disruption of work in the IT sector. 

Since the strike by the comrades will be followed by yet another one on the following day by their inveterate opponents, the Trinamool Congress, the IT sector's troubles will not end in a day. At a time when the Left has suffered reverses in the panchayat elections, a renewal of the old practice of disruption of normal life in Kolkata and elsewhere will not enhance the government's prestige while the Trinamool Congress will only be interested in muddying the waters. 

Under these circumstances, it was only to be expected that the corporate world would support the government although this would only draw further criticism from the Left and others about the government's concern for the sensitivities of businessmen rather than for 'aam admi' (common people).

However, the government may also consider the fact that more than the prime minister's address to the nation explaining the reasons for the hike, the wide-ranging debates on TV channels and, more importantly, in the many Hindi and other regional language newspapers will go a long way in highlighting the government's case.

The fact that the entire opposition has become a bunch of nay-sayers, resisting everything from the nuclear deal to economic reforms and now the increase in oil prices will also not go unnoticed by the average viewer and reader. 

On the government's side, the fact that Manmohan Singh referred to the need for nuclear energy in his address carried a faint hint that the government might be moving towards clinching the nuclear deal as well, following up one bold step by another. 

While the Left can act irresponsibly since it is unlikely ever to have the chance of determining policies of this nature in New Delhi, the BJP may become a little cautious after the first show of opposition since it now likes to present itself as a government in waiting. 

Already, its prime minister-in-waiting, L.K. Advani, has marginally distanced himself from the party line on the nuclear deal by saying that he may be convinced by a second draft. Similarly, he cannot totally deny the international factors forcing the government's hand. 

If the government can hold its nerve, all may not be lost for it. Besides, it knows that for all their huffing and puffing, its internal critics, barring the Left, will not have the guts to walk out. The commissars may do so, but only at the risk of angering their power base in West Bengal, where the Left Front is evidently not too eager to face an election.

(Amulya Ganguli is a political analyst. He can be reached at aganguli@mail.com)


More by :  Amulya Ganguli

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