The desperation of Veerappa Moily

Moily's fantastical prescriptions to reduce oil imports prove his desperation, and his party's indifference

Oil Minister Veerappa Moily’s ideas  to conserve fuel and bring down the oil subsidy bill have gone from being mildly amusing, into the realm of the bizarre. Unveiling his ministry’s ‘National Mega Campaign’ aimed at conserving fuel, Moily announced earlier this week, that there was a proposal to declare one day in a week as ‘bus day’.

Chief Ministers, central ministries and PSU heads were being prodded to pronounce their support for this absurd plan, which included among other fantastical ideas, things like urging people to car pool and a ‘free cycle scheme’ in select cities. A sum of Rs. 45 crores has been allocated for this campaign that will be launched from the 1st of August and rope in sports icons like Virat Kohli and Saina Nehwal to propagate the minister’s message. Moily had, keep in mind, also pitched for night curfew at petrol pumps a few days ago – a proposal that was unanimously slammed.

 

 ‘Moily is asking us to prepare for early death’ read a tweet, in response to the suggestion on using cycles. The riposte is not entirely unprovoked. Asking people to bike it to work when over 1.5 lakh Indians die of car accidents every year on unsafe roads is a joke. In fact safety is one reason why the roll out of the quadricycle is being hotly debated in government committees, so Moily would be contradicting his government by proposing something like this. To top that, the cost of the ‘free cycle scheme’ will be borne through ‘funding support from oil companies’. As if the subsidy burden weren’t enough, is the ministry now going to further milk OMCs reeling under the load of under recoveries? 

How much will all of this cost? Who will these cycles be given to? What exactly is the scale of this program? We don’t know. One can’t help but think, it’s a sneaky election sop. Nitish Kumar’s bicycle scheme is a big success, remember? 

Now, the ‘bus day’ plan. 
 

The press release has Moily declare “I have also urged all the Chief Ministers, major PSU heads and heads of different central ministries to declare one day of the week as ‘bus day’ during which all may be encouraged to utilize only public transport for their daily commute.”  
 

Are we now going to see Pratip Chaudhuri, Raghuram Rajan and Prithviraj Chauhan board the local BEST or DTC buses to work? Quite unlikely that will happen. They are probably excluded, just like apex level IAS officers are, from traveling cattle class in Chidambaram’s austerity drive. The lower rung of the bureaucracy then? A majority of them already take the public transport, I reckon. And those who don’t are unlikely to be swayed by a superfluous spur-of-the-moment campaign. 
 

Which brings us to the carpool idea.
 

While it is all very well to ask people to pool cars to work, it cannot be a serious solution to curb fuel usage. In a country that has a measly vehicle to population ratio of 12 per 100, where millions of cars are anyway going to be added to the road, thus increasing demand for fuel, no matter what you do – carpooling is hardly a far-reaching prescription! 
 

These wacky suggestions by Moily only prove 2 things – A) his sheer desperation and B) the government’s nonchalance about the burgeoning subsidy bill, as long as they are seen to be doing something to curtail it – no matter how obtuse their measures. The first time they proved this knack for treating a dying patient with preventive care, was when they banned duty free import of LED television sets to curb the CAD. They did it again by asking babus not to travel executive class. And now, it’s Moily who’s struck, It seems to be a recurring theme. 
 

Of course, Moily has been given a directive by the Prime Minister to save $25 billion in petroleum subsidies without the power to raise prices, and hence this last minute scramble.The minister feels $5 billion in oil imports would be saved through such efforts, but one wonders what calculation it is that he has used to arrive at this fat number! 

‘As of now there is no proposal to raise prices (of diesel, LPG)’ Moily said at the press conference where he announced his ‘mega campaign’.  In fact a cut in petrol prices could be on the anvil according to media reports. No matter that Rs 128,976 crore is the under-recovery likely on account of subsidized sale of diesel, LPG and kerosene this fiscal and Rs. 14.50/litre is the loss on diesel alone. 

No matter also, that India’s fiscal deficit could well be over 5%, crossing that ‘red line’ according to Fitch, and the threat of a sovereign downgrade exacerbated, the precursor of which was a downgrade of SBI by Moody’s.
 

No matter surely, that the rupee could crash down to the 69.5 levels again, according to Standard Chartered estimates.