Fuel Prices Catching Up With Reality?

A little while ago, we asked whether Indian politicians had the courage to raise prices at the fuel pump in response to the country's ballooning crude oil import costs.

Prakash Singh/Agence France-Presse/Getty Images

BJP activists block traffic during a protest against petrol price hike in New Delhi on Monday.

Well, it's time to hand out some partial credit. Over the weekend, with state elections in the rearview mirror, state-owned fuel retailers raised petrol prices five rupees per liter.  They've got to do another price increase of the same magnitude to get their balance sheets out of the red, but the government should be commended for taking a necessary and painful step.

No one wants higher fuel prices, especially when food price inflation is causing enough problems as it is. For some, paying more at the pump is an annoying additional crimp on the monthly household budget; for others, it decimates what little disposable income they may have had. That's why people were lining up at petrol stations around New Delhi late Saturday, hours before the rate increase went into effect, to fill up their tanks. And it's why tens of millions of Indians are angry.

But the reality is that the longer India waits to get in line with plus-$100 per barrel global oil prices, the worse the e [...]

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