The government does little or nothing to stem the losses being racked up by the public sector oil marketing companies and sooner than later these companies start rationing petrol and diesel. The consequent consumer backlash, particularly from the farmers whose sowing season will have been disrupted, heralds the beginning of the end of this administration. Or, the government does indeed raise prices, rejigs tax rates and whatever else required to pull the oil companies back from the brink of financial collapse. But then in the aftermath, the Left parties withdraw support; the government loses its majority in Parliament and the Congress party is pushed into elections under unpropitious circumstances.

The Webster dictionary defines ‘dilemma’ as a difficult situation; a predicament that compels a choice between two unattractive options; the space between a hard rock and a stone. The government is today wedged tightly in this space. It is struggling to extricate itself but whatever it does now will seem to be too little too late.

How have they got themselves into such a spot? India is not, after all, the only country that is reeling under the twin burdens of historically high oil prices and unprecedented volatility. China, Pakistan, Malaysia and Indonesia have all adopted policies to shield their consumers from the brunt of high prices. They have implemented them without distorting the structure of energy demand or undermining the viability of their domestic industry. Why is it that in India we have not been able to secure a similar balance?

... contd.