We should realise that decisions are not the result of deliberations between civil servants and politicians in a careful duet of transparent liberal governance. It is the result of subjective preferences of a handful of individuals, some with constitutional authority, others without.

There is no doubt that were the government to pass on fully the sharp rise in the international price of oil to the consumer it would cause a backlash. Witness what happened recently in Myanmar. But we need not do that for the companies to recover their health. Consumers are already paying around $200 a barrel for petrol and $130 a barrel for diesel — when the price of crude is around $95 a barrel. The difference is largely made up by taxes. The government could, for instance, consider reducing their take. But this is easier suggested than done given the somewhat ‘siloed’ approach of the various ministries and the differing priorities of the Centre and states. But this may well be the only means by which the government can shield the consumer from the volatility of the international market.

Every democratic oil import dependent country is reeling under the current high price regime. But not every one has responded by pushing their national companies to the brink; or by jettisoning sound corporate governance. Most have developed mechanisms by which the burden is shared between the companies (cap on profits/margins); the government (reduction in taxes) and the consumers (a partial hike in prices). There has been protest but ultimately everyone has accepted TINA (there is no alternative). We have to find a similar mechanism.

... contd.