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Economic populism, partial deregulation of transport fuels and electoral outcomes in India

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  • Srinivasan, Sunderasan

Abstract

The Indian political class is known to employ populist, albeit economically unsustainable, measures to replace intrinsic ‘valence’, especially shortly prior to election windows. Such measures include loan-waivers, interest rate concessions, provision of free electricity for agriculturists, etc. The union government’s leverage to maneuver and to micro-manage retail fuel prices within partially deregulated environments is hypothesized to provide incumbents with an advantage over rival contestants in the electoral process. This paper analyzes the evolution in the retail prices of diesel and petrol (gasoline), and the transfer of such evolution, into the inflation index of the ‘all commodity’ basket. It is observed that when international benchmark prices are relatively low and domestic inflation is moderate, the transfer occurs within about 42 weeks. During periods of high oil prices-frequently above USD 100 a barrel-and high inflation-higher than 5.00–5.50%-prices of petroleum distillates tend to feed into overall inflation more rapidly, within about 34–40 weeks.

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  • Srinivasan, Sunderasan, 2014. "Economic populism, partial deregulation of transport fuels and electoral outcomes in India," Energy Policy, Elsevier, vol. 68(C), pages 465-475.
    • Handle: RePEc:eee:enepol:v:68:y:2014:i:c:p:465-475
    DOI: 10.1016/j.enpol.2014.01.026
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    1. Benczes, István & Szabó, Krisztina, 2023. "Társadalmi törésvonalak és gazdasági (ir)racionalitások. A közgazdaságtan szerepe és helye a populizmus kutatásában [Social cleavages and economic (ir)rationalities: The role of economics in populi," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 23-54.

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