Where is the Czarina now on LPG restriction

Today, when news leaked about Petrol and LPG price leaked in the evening and how every LPG consumer will be allowed only 4 cylinders at the present price and every cylinder more will cost double, I was actually out to buy some groceries.

The most telling comment was by a well dressed man, who it appeared from his comments to be an employee of the Central Government.  My perspective (it is essential to stress that it was ‘mine’, as I don’t know him or about him and he never gave any outright indications) was that he was an employee of the Department of Income Tax.

Whatever he said is unprintable, (even by my standards), but here is a gist of what he had to say -
"In 2004 the PM’s wife was against  increasing price of LPG cylinders and I (he) would like to know what the ‘bee’ is doing or thinking now - does the ‘bee’ think of advising her husband, as she indicated then?

Or has the PM Manmohan Singh’s status moved from the middle class to nouveau-riche by someway and the ‘bee’ has got enough in her ‘treasure’ that she and her family can digest the hike’.

As I stated before, it was his version and though I don’t agree with the language, I can understand the emotion behind it.

Let us see the problem in perspective:

Background -
The Manmohan Singh Administration, under the able leadership of Jaipal Reddy proposes to limit the supply of LPG cylinders at present rate to 4 per family, per year (presently at Rs. ~400/- (~ $9) per cylinder at Chennai) and every cylinder after than has to be brought at full price at about Rs. 800/-. 
Even by the same administration’s admission, a cylinder of 14.5 kg should last a family for 45 - 60 days.

Practical Reality -

• The practical reality is that even a ‘unitary’ household in India should not be counted as consisting of 4 members.  The reality is that a practical household in India, even a unitary household which does not include the concept of Joint Family, has to be considered as 6.  Two (or One) earning member supporting his parents and his 2 children.
• In such a household, a normal domestic cylinder in any case not last for more than 40 days.  If the parents are old or the children very young, it would not last even 30 days.
• Here is the quirk - not all households will have this 6 components.  Let us just see a ballpark calculation.  A father and mother in 60s or 70s having 2 progeny can be expected to have a rich family of 2 in laws and 4 grandsons/daughters.  By that calculation, an ideal, average household in India should have 5 members.  Mind you, I am not suggesting that the old grandfather and grandmother should be each kept with each progeny, but assuming they live 6 months with each, the average is 5.  With that the administration’s calculation of between 45-60 days endurance for a cylinder is understandable and acceptable.

In Practice - (this post was supposed to be published on 15th;  but due to the benevolence of the TN Electricity Board who deemed it necessary to shut down power more than a couple of times on 15th eve., it is being posted on 16th.  Please read all references to ‘days-back’ accordingly)

• Whenever I blog about speculation and the need and mechanism to curtail it, my friends immediately round up on me as though I am some sort of a communist and want to shut down the Share Market.  What I am actually against is rampant speculation which is driving up the Share Prices in the Share Market, the Food Prices in the Commodity Exchanges and the precious metals like Gold, Silver, Titanium, not to mention of the Black Gold.
• Here is my practical experience on the ‘inadvertent’ speculation on the LPG domestic cylinders, which this administration doesn’t even realise it exists, or wants to exist and doesn’t have any clues or inclination/ideas to control.
• 4 days back, the driver of an auto I was riding lamented that he sold off his LPG cylinder for only Rs. 550/- whereas he has to pay Rs. 650/- when he wants one.  On prodding, he admitted that his family consists of 4, he, his wife and 2 school going sons and he usually consumes about one cylinder every 22 days.  Further nudging revealed the mystery behind 22 day consumption level - his wife has a morning only eatery serving idly’s and chutneys.  Actually that is beyond the point of this post.  What is pertinent is that his wife suffered an acute attack of spondylitis and was bed ridden for last 25 days.  When I asked him the obvious, his reply was that ‘since he routinely booked a cylinder every 25 days, he was afraid that if he missed this time, his next booking would throw up an anomaly and would deprive him’.
• :-P
• 3 days back, a childhood friend and neighbour asked me whether I have an empty LPG cylinder since his booked cylinder is in front of his door and his own cylinder for which he booked a refill is not yet consumed.  Without a thought and on his assurance that the LPG cylinder at his home is due to be empty in a couple of days, I loaned him the empty cylinder with me.  When I queried as to why he booked for a refill without an empty cylinder, he said ‘he miscalculated that supply lag time as 20 days and booked for a refill thus’.
• 2 days back, I was stunned to witness an LPG cylinder delivery boy being treated with tea and biscuits by the lady in the house (yes, an individual house, we still have them in the heart of Chennai) across the street.  A few minutes later, the benevolence of the lady became apparent when her niece drove down her Honda Activa with an empty cylinder.  Pertinent to mention that the lady runs a full fledged mini-mess like setup where she cooks pre-ordered food. 
• Yesterday, my maid servant was commenting about the LPG cylinder in black market.  This being the first time I am ever interacting extensively with her - due to my mother’s illness - I was interested to hear that LPG cylinder for her doesn’t last for even a month (again a unit of 5 - she, her sick husband, 2 college going sons and an employed daughter).  I was astonished to hear that she recently bought a cylinder from a neighbouring old man (no my friend) for Rs. 550/-.  When I asked her why she never asked me (meaning my mother) for the spare cylinder when ours lies idle for about 30 days or so in the corner, she said ‘Well, you would never take any extra money.  You would only take Rs. 405/- which you paid, in which case, our relationship which is one of an employer-employee-business would change to one of ‘indulgence’ and ‘obligatory’ - which in turn would mean that I (she) would be obliged to do extra chore, if necessary’.  Now that was a flanking thrust which I never expected.
• 8-O
• Today, when I asked my friend about the cylinder, I was stunned to hear a nonchalant reply that I can let him know when my own cylinder is in front of my door and he would ‘scrape’ around for ‘the’ empty cylinder ‘then’.  It seems the cylinder with him ‘would’ be ‘expected’ to be ‘probably’ empty by 20th (another 5 days since) or ‘so’.

Lesson learnt -

1. Never, never ever feel magnanimous in loaning anything of mine - books, tools or even an LPG cylinder - because when you need them, you’ll never get them back.
2. When I have even a suspicion that it is a speculative activity, run like hell way - don’t even stay in the vicinity.

Conclusion -
As we’ve seen above, there is an enormous amount of speculative procurement of LPG cylinders, either due to ignorance, miscalculation and misjudgement, commercial, personal interests and what not.  I agree with the administration that such speculations in LPG market should be brought down and controlled, if not eliminated.

But the figure of 4 cylinders per year is absurd, for reasons enumerated above.  For the record, my family’s usage of LPG is about 50 - 60 days per cylinder, depending whether there are any festivals during the period.  Thus from my own experience and from talking to people around, and based even on the administrations own admission 45 days seems to be the ideal, optimal usage for a domestic LPG cylinder for an unitary family.

Which means around 8 cylinders an year instead of the proposed 4 cylinders an year.  People I talked to in the evening - middle class (DINK or DITW or SIOK) families or variation thereof, seem to agree that a tiered price level or ‘price band’, like adopted my most Electricity Boards is acceptable.

With all these in view, I personally feel that:

A tiered price level should be announced by the administration, instead of a willy-nilly, bee-in-the-bonnet sort of announcement.  Perhaps even put out the proposal in public domain for a week or so and invite public opinion.  For the  differently abled Jaipal Reddy, this different track, which is more logical, explainable and understandable to tne public should not be so different, rather than the idiotic, unexplainable and illogical proposal by the Oil Companies.

• 8 cylinders at present price level of Rs. 400/- per cylinder per year.
• 9th and 10th Cylinders at 50% extra (Rs. 600/- per cylinder) - as even my maid servant is willing to pay or an auto driver is willing to sell.
• 11th and 12th Cylinders at 100% extra (Rs. 800/- per cylinder) - well, if you are earning money out of subsidy, then you pay the full price.
• above 12th cylinder at 50% profit (Rs. 1200/-) per cylinder - if you consume a domestic LPG cylinder every 25 days or less, you should be penalised (sort of ‘Green Tax’)

:-)

While on the subject, I haven’t raised any points about the functioning of the Oil Sector PSUs, which requires several separate posts - one simple question:

• By having 3 different procurement, processing and distribution network (Indian Oil, Hindustan Petroleum and Bharat Petroleum), how much is the wastage due to duplication?
• Will the ‘differently abled’ Minister will also think in a ‘diffferent’ to the existing way on this?  Or at least order a study?

BTW Minister, by looking out for Oil Companies, don’t drive the consumers to the other extreme.  This is not Europe or America where you cannot burn wood or coal to cook food or boil water.  If you make LPG uneconomical and unaffordable, people would go back to burning wood and coal - even in the cities.

Just put this question to your predecessor, Murli Deora - does he remember the time when even people in South Bombay used to have copper wood/coal fired boilers to heat water in their balconies?  In case you don’t know what I am talking about, just let me know - my neighbours still have one in their lofts;  I’ll post a snap if you want one.

Here is an image courtesy The Hindu

Tags: manmohan_singh,LPG subsidy

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