In a recent piece in the Indian Express, Atanu Dey argues that keeping fuel prices low is effectively delivering subsidy to the rich, by subsidising the cost of car transport. In response to this, he says there should be an annual fuel surcharge imposed per-car. This way, he says, fuel price hikes can be prevented for buses, scooters and trucks, which are common man’s vehicles, and burden only the rich.
Category: economics
Fuel price hike
So petrol prices have gone up by a whopping 10%, and LPG by an even more whopping 16%. It’s quite ironical that the government, which in the name of the aam aadmi had rolled back a number of reforms has had to do this in the final year of its reign. They say that the prices have been moved up by an amount more than necessary, so as to leave room for a Yashwant Sinha-esque rollback. Nevertheless, for the price of a government-controlled commodity, the increase is significant.
Hotel Dwaraka
In its earlier sit-down avatar on Bull Temple Road, it was known for doling out copious quantities of chutney in buckets. No sooner had you emptied half the chutney on your plate, a waiter would materialize and pour a bucket of the stuff into your plate. The main item on the menu here was the “khali dosa” (not to be confused with “plain dosa”). No sambar no palya no saagu. Just enormous quantities of chutney.
On introducing democracy
Ravikiran Rao argues that the reasons most Indian parties are afraid to embrace inner party democracy is that the people who are in charge are afraid that if they introduce democracy and lose the first election, their opponent might destroy the democracy and just keep the power with himself.
Isn’t this the case everywhere? Be it Indian political parties or African countries or even the local club. I mean, if you want to introduce democracy (by which process you are giving away something), you should be convinced that the opponent plays by the rules. However, in most cases, it is tough to find an opponent who is guaranteed to play by the rules. However, if democracy is introduced and works successfully for a few years without anyone trying to misuse it , in that case, it will stay for good.
One implication is that you try to introduce democracy when you know that you will win the first round. Given that you want to introduce democracy means that you aren’t THAT power-hungry and are willing to give away a bit in order to secure long-term systemic gains. Which means that you are likely to play by the rules in your term as power. And once you can ensure that, democracy is likely to get embedded in the system, after which even if you lose one, you know that your opponent won’t be able to do much to blindly hang on to power.
When countries become self-governing after an independence-struggle, the party that is in charge will usually be the one that has led the struggle. And it is usually confident that it can win the first couple of rounds. Hence, most countries that became independent in the 40s to 60s started off as being democracies (that many of their systems have broken down is another story) – it was useful to gain brownie points with the US, UK , etc. and there wasn’t much threat to capture of power.
However, when you have got power through other means – say by some kind of an inorganic process, then there is no guarantee that you will win the first round, or second round, or ever. Hence, you have some countries that came out of the Eastern Bloc and Central Asian countries that have never made an attempt at democracy. The people in power know that once they try to bring in democracy, their power is effectively over.
On a similar note, countries that have moved away from democracy (Zimbabwe immediately springs to mind) have no incentive to bring it back – again the first round victory is not guaranteed. Yes – there have been efforts such as those in Pakistan to reintroduce democracy, but it’s being done under some kind of special circumstances – such as Musharraf’s party not being allowed to contest, etc. Also it has been done under considerable supervision of the US, so self-interests of Musharraf can’t be so blatant.
Ministry Formation – my theory
So Yeddyurappa has been finally sworn in as the CM of Karnataka, this time hopefully for a longer period. Some 29 people have already been sworn in with him, leaving just four more slots (there is a limit of 34 on the size of the ministry). Trouble has already started brewing as some senior leaders and long-term MLAs (such as Jagadish Shetter, Shankar Linge Gowda and A Narayanaswamy (Anekal) ) haven’t been accommodated in the ministry. There are reported to have been protests all over the state yesterday regarding this.
Death Markets
I wrote this in a mail to the Satin group. This was in response to a mail by Amit Varma talking about priests in Haridwar who conduct the pre-ashes-dunking ceremony, and their fees, and the bargaining, and what could be a decent solution for the problem. I thought it might make sense as a standalone post, so I’m reproducing it here.
Can I play with elasticity?
The government’s latest gimmick to keep petrol prices unrealistically low is to impose a special additional levy on income tax and corporate tax in order to finance the deficit. Basically a scheme to rob peter and pay paul. Make the higher-income guys pay for the excess oil consumption by the lower income guys.
More on pricing of air tickets
More than a week back, I had written in my blog that the airports need to change the fee structure of user charges, etc. so as to drive the marginal cost down to zero so as to ensure more efficient usage of seat space and better revenue management. It seems like I didn’t? do my research too well. Out of the approx. Rs. 2800 in “fixed charges”, about Rs. 500 only is user charges, the rest being levied by the airlines as “fuel surcharge” (remember that airline fuel isn’t subsidized like petrol or diesel).
Zoning with respect to the new airport
Now that the airport has been successfully moved, despite the vehement protests from the powerful IT-BT-ITES lobby and various others, the next fear is that these companies will move close to the new airport. As it stands now, I’m not sure how the NH7 and other roads that lead to the new airport are going to deal with the increased traffic. If you add to this traffic generated due to commercial space in the same direction, things can get really bad indeed.
Discounting at megamart
Megamart (the discount chain run by Arvind Brands) has a really weird discount policy. Usually, the discounting mechanism that clothing stores follow is progressive discounting – the more you buy the more discount you get. In fact, even Megamart was following this practice a few months back. “Buy one get 20% off; buy two and get 30% off” and so on. This kind of discounting encourages more sales per footfall, and so the discount is worth it.