The Central Government finally gave in to pressure and increased the prices of petrol and diesel. There have been sharp reactions to this from the common man as well as political parties. But this issue must be seen in a broader perspective. The government had little to do in the face of a new high in international oil prices.

International oil prices have crossed the $70 per barrel mark. Till two days back, majority of the burden was born by the public sector oil companies. Petrol and diesel came at about Rs. 5 and Rs. 3 less to us, respectively. This burden was born only by the oil companies. This has resulted in a sharp decrease in revenue to the oil companies. The Central Government receives a large annual dividend from them. The government was in danger of losing out on this dividend. It could have had an impact on the economy.

Therefore, the government had to lessen the burden on the companies and take some burden on itself by issuing bonds to the companies and distributing the rest on the people. Hence, the increase in the prices.

Reactions to the increase, expectedly, have been sharp. But it has to be realized that the price hike had to occur irrespective of which government is ruling. It is unfortunate that the common man has to face the burden but there was no choice.