India is seeing the ill effects of the ever-increasing oil prices. Recently the government had to marginally increase the price of petrol, diesel and cooking gas as the oil companies were finding the strain of absorbing the oil price rise too much to bear. The price hike was in second thoughts a bad move. The rate of inflation which was hovering around the 8% level, jumped to 11% plus within days.

The protests by the general public have been surprisingly lower than expected. This was perhaps because the government has been explaining well the reasons for the inevitability of the price hike. The middle class who has borne the brunt perhaps understand the situation (the prices of kerosene have been left untouched. The poor anyway get highly subsidized kerosene). But the country’s truckers have gone on strike, demanding that the diesel prices be rolled back. What they do not understand is that if their strike continues for more than two days, this will further increase prices of commodities (as there will be shortages).

Another thing they do not understand is that it is impossible for the government to roll back prices. The oil bill is already eating away 1.5% of India’s GDP. The government does not have unlimited resources. Continuing high level of subsidy would make it cash strapped for other very important social welfare purposes.

Many Asian nations besides India, like China and ASEAN countries too protect their citizens from the full impact of the oil price hike. But when recently the burden got too unbearable they too have cut oil subsidies to a certain extent.

All India Motor Transport Congress (AIMTC), the truckers’ body leading the strike, should be smart enough to understand three things. Otherwise they will end up looking like fools.

Firstly, the recent fuel price hike has to be accepted. The government is no position to roll them back.

Secondly, as said before if the strike continues for too long, it will trigger a further hike in prices of all commodities (including food item). The truckers will then face the fury of the public already battling high prices in their daily life.

Thirdly, though the government will not roll back fuel prices, it will not dare to raise them in the near future as it jacks up inflation in leaps and bounds.

In conclusion one may say the truckers have gone on strike without thinking out things. If the government is smart enough to get the message across to the masses that the strike is adding to inflation, the truckers will not know what hit them.

Source: Biopact

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