Gas cylinder cap has lessons for the future

If the government could create a convincing case for capping gas cylinder numbers, there is no reason why the government cannot build a solid case, using similar methods, for a further increase in diesel price.

Of all the decisions that the United Progressive Alliance government took last week to end a long period of policy paralysis, the one that has caused the least provocation to opposition political parties is the annual capping of the supply of subsidised cooking gas cylinders.

This is surprising, as its net effect on a householder's annual budget will likely be substantial.

 After consuming six cylinders in a year under the administered pricing regime, a householder's cost of acquiring every additional cylinder during the year will be 88 per cent more than the subsidised price.

For a householder consuming an average of 12 gas cylinders in a year, therefore, the annual outgo on cooking gas would be higher by 44 per cent once the new system is put in place.

This is much higher than the 12 per cent increase in diesel prices.

 This approach has many lessons for the government in tackling several other similar reforms whose implementation would hurt vested interests.

For an important and tough decision to have a smooth ride, the government needs to build a strong case for it through all-party consultations and dissemination of information that secures a buy-in from important stakeholders.