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Oil price aftershocks


After the petrol and diesel price hikes, it was only a matter of time before public transport fares went up which would soon be followed by corresponding increases in the price of almost every commodity. And as expected, within days of announcing the new fuel prices, the government fixed new transport fares. Bus operators can now charge Rs 4.50 for every seven kilometers-they're already said to be charging Rs 5.00 because of the problem of handling change-and Rs 5.50 for distances between 7-13 km, while the fare for a distance between 13 to 25 km is Rs 9.

Taxi rates have also increased: at flag down it is Rs 7 and the charge for every kilometre travelled is Rs 12, up from Rs 9 before the changes. Likewise, the flag-down rate for metered three-wheelers is Rs 3 and Rs 8.50 for every kilometre travelled. The taxi rates will be effective after the Department of Standards re-adjusts the meters, but drivers are already asking customers to pay the increased rates, which is calculated on the spot.

Actually, the government increase of 7 percent fell far short of the 30 percent hike demanded by transport operators for short-, medium- and long-distance public vehicles. It will be some time before the fuel price increase registers in national inflation statistics. This is because fuel, light, water and transport together account for less than 10 percent in the basket of goods on which the Consumer Price Index is calculated. But over time the increased prices will begin to reflect in the cost of production of all goods and services-from restaurant food to labour wages.

In the short run, because of the subsistence nature of the economy, the severest impact of the new oil prices will be felt mainly in urban and semi-urban areas where people rely solely on imported kerosene for cooking. It was thus not surprising that the Central Carpet Industries Association (CIAA) demanded that carpet workers be given 12 litres of subsidised kerosene each month since the proposed three litres would not be enough to meet their needs.


LATEST ISSUE
638
(11 JAN 2013 - 17 JAN 2013)


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