Why the middle class hates petrol price hikes

Simply put, it’s because it wants to spend the money elsewhere.

State-run oil companies on Thursday raised the price of petrol by Rs 3.14 per litre, the third substantial increase since January, a move which is expected to stoke inflation and upset household budgets, reports the Times of India.

The report goes on to add that consumers said the increase was unjustified and imposed a fresh burden. “It is becoming unbearable and how can the common man face such sharp increase. It will add to already high expenses,” said Deepak Majumdar.

Who are these consumers affected by the ‘unjustified’ petrol price hike? Who is this ‘common man’?

It’s not the poor - they cannot afford the basic necessities. It’s not the rich - no price rise will affect them. By elimination, it’s those caught in between - the middle class.

From last evening on, news television tore the government apart on the issue, fuelled (pun intended) by statements by spokespersons of all political parties, including constituents of the ruling UPA.The Congress was isolated, lonely and battered, unable to string together a coherent argument to defend the move.

There are many, of which the most important is that the middle class does not like to pay more for petrol, much as it does not, inexplicably, like to pay more for onions and potatoes.The same middle class, however, will buy a car. Cars starting from Rs3 lakh to Rs10 lakh. The same middle class will buy flats costing Rs2,500 per square-foot onwards. The same middle class shops at malls, conspicuously consuming unnecessary and unwanted goods. The same middle class keeps the telecom industry’s cash registers ringing; it buys the latest phones and has multiple phones per household. It holidays at least once a year - sometimes abroad -and flies to its destination causing the airline industry to grow manifold. It schools its children in high-priced private schools and then sends them to high-priced private colleges, often abroad. It hosts the most extravagant weddings, inviting people it barely knows. It eats out at restaurants, drinks at pubs and bars, buys the coolest brands of clothing, entertains itself at multiplexes.

And it has a problem with the petrol price hike?

To make matters worse, there’s this statistic forwarded by minister of state for finance SS Palanimanickam in a written reply to a question in the Rajya Sabha: “Just 2.77% of India’s 1.21 billion people pay personal income tax… The number of effective tax payers as on 31 March 2011 was 3,35,79,831 (33.57 million),” .

Some more statistics. According to an NCAER (National Council of Applied Economic Research)study, which uses ‘household income’ as the criterion, a family with an annual income between Rs 3.4 lakh to Rs 17 lakh (at 2009-10 price levels) falls in the middle class category. The study says,“The middle class that represents only 13.1% of India’s population currently owns 49% total number of cars in India, 21% of TVs, 53.2% of computers, 52.9% of ACs, 37.8% of microwaves and 45.7% of credit cards.”

And it can’t stomach a Rs 3 per litre petrol price hike?

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