Immediately after results of elections to assemblies in 4 states were announced the government raised the price of petrol by Rs 5. Apparently the price should have been raised by Rs 10.50 for oil companies to break even so companies will continue to lose money. Ordinary petrol costs around Rs 65/lit at pumps in India while in the US, where it is uncontrolled, it costs $ 4/ gallon or 3.78 lit which makes it Rs 50/ lit. Diesel is cheaper by Rs 20 while kerosene is cheaper still allowing criminals to adulterate one with the other. Raising the cost of diesel will raise inflation instantly, which is at 8.66%, impacting the poor. The only solution is to lower excise and taxes on petrol and diesel so that they are at the same level as kerosene and then decontrol them fully allowing oil companies to raise and lower prices in line with international prices. The government does not dare do that because revenue collection will fall and deficit will get out of control. Also customs and excise officials oppose any reduction of excise duty because they get a bonus on the amount of money they collect. Oil companies are owned by the government so it has to pay for their losses. Thus the government is losing money anyway but cannot control inflation because of taxing oil products at different rates. Stupid. The good news is that Mr Montek Singh Ahluwalia may be appointed director of the IMF. We wish him extreme good luck. With two world class economists, Mr Manmohan Singh and Mr Ahluwalia, running the economy it is already in intensive care and gasping to survive. If only one man is left maybe the damage will be halved. We live in hope.