Petrol Hike -- is it valid

The FM - Mr Pranab Mukherjee is nowdays fighting a battle with the opposition and some members of the government itself on the fuel price hike.

We need to understand the rationale of the hike. The core of the issue is fiscal prudence. The FM wants to bring down the fiscal deficit ( difference between earnings and expenditure of the government) to 5.5% in this fiscal-- Thats his target.

For this he needs to be able to reduce his subsidies and increase taxes.

He has actually reduced the personal tax and increased some of the excise duties and brought more businesses into the services net. However he has increased the expenditure in key areas of infrastructure etc. So to compensate he needs to reduce the subsidy on petroleum products and he has done that by raising the prices of fuel  ( he has also reduced subsidy in fertilizers)

Thats the basic rationale. -- ensuring you spend less than you earn!

I look at this as positive. We as indians need to understand the importance of fuel and fuel conservation technologies and tips. We can everyday see lots of wastage of fuel and sometimes the advertisements on the conservation of fuel ( like the kid who tells his father that he would like to start a cycle company since by the time he grows up all fuel would have finished) hopefully resonate with people's consciousness.

We all need to do our part on conversation of fuel-- petrol and diesel and gas. ( read some of my tips and experiences here)

I say kudos to the FM and PM for holding their ground.... keep it up--- we are with you.