utilitarianism - jeremy bentham's view on cap on lpg.docx
TRANSCRIPT
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SUBJECT:
COMPARATIVE JURISPRUDENCE
PROJECT WORK ON THE TOPIC:
CAP ON LPG CYLINDER SUPPLY
[IN LIGHT OF JEREMY BENTHAMS VIEW OF JUSTICE]
SUBMISSION TO:
PROFESSOR AMITA DHANDA
[PROFESSOR OF LAW]
SUBMITTED BY:PARUL PRASAD
1ST YEAR, LL.M
ROLL NUMBER - 2012-28
AT
NALSAR UNIVERSITY OF LAWHYDERABAD
DATE OF SUBMISSION:
10-10-2012
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CONTENTS
INTRODUCTION ................................................................................................................ 3
BENTHAMS UTILITARIAN ARGUMENT .............................................................................. 5
CONCLUSION .................................................................................................................. 10
APPENDIX....................................................................................................................... 11
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INTRODUCTION
This project paper starts from the empirical observation on the cap on domestic LPG supply:
1. On 5th September, 2012 - The petroleum ministry had moved a Cabinet note seekingimmediate hike in diesel and cooking gas and also limiting the supply of subsidised
LPG cylinders to four-six per household in a year, after the Finance Ministry said that
it has no money to provide for fuel subsidy. The ministrys proposal to the Cabinet
Committee on Political Affairs (CCPA) also included barring households with income
of more than Rs 50,000 per month or Rs 6 lakhs in a year from getting subsidised
LPG cylinders.
2. On 13th September, 2012 - The CCPA took the following decision to beimplemented with effect from the midnight of 13/14 September 2012:
Restrict the supply of subsidized domestic LPG cylinders to each consumer to6 cylinders (of 14.2 Kg) per annum. Any number of cylinders will be available over and above the cap of 6
cylinders at market rate.
The number of subsidized LPG cylinders available to each consumer in theremaining part of the current financial year [2012-13] will be 3 cylinders.
While subsidized cylinders will continue to be available at Rs. 450 percylinder, the market rate of domestic LPG cylinders at non subsidized rates
will be notified by the OMCs [Oil Marketing Companies] on monthly basis.
3. UPA constituents like the Trinamool Congress (TMC), DMK, Rashtriya Janata Daland Nationalist Congress Party along with the Opposition parties have slammed thedecision and want an immediate rollback. The Trinamool Congress demanded that at
least 12 subsidised cylinders should be provided to every consumer in a year but the
government's refusal to roll back the decision drove the TMC out of the UPA.
4. On 19th September, 2012 - In a major step to accommodate demands of its allies,Congress president Sonia Gandhi directed Congress ruled states to increase the
number of subsidised LPG cylinders from six to nine for each household in a year.
Haryana, Maharashtra, Delhi, Andhra Pradesh, Rajasthan, Arunachal Pradesh, Kerala,
Uttarakhand, Assam, Meghalaya, Mizoram and Manipur have congress governments.
5. On 21st September, 2012 - The government abolished the 5% custom duty and 8%excise duty on non-subsidised domestic LPG cylinders.
6. On 2nd October, 2012The Oil Marketing Companies have decided to revise theprices on the first day of every month. State-owned OMCs have hiked the price of
non-subsidised LPG by Rs 127 per cylinder on account of increase in international oil
prices. Thus, every additional cylinder at non-subsidised rates will now cost
Rs. 883.5 in Delhi Rs. 894 in Mumbai Rs. 913 in Kolkata Rs. 877.50 in Chennai (source - The Indian Oil Corporation).
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In states like Uttar Pradesh and Bihar, consumers will have to shell out nearlyRs 900 for the same.
Even the prices of subsidised LPG will go up across the country, depending onthe taxes and levies imposed by individual states.
7. On 6th October, 2012 Subsidised LPG price has been hiked by Rs 11.42 percylinder following government decision to raise commission paid to the dealers from
Rs 25.83 per 14.2-kg cylinder to Rs 37.25. The commission paid on market price or
non-subsidised LPG too has been raised by Rs 12.17 to Rs 38 per cylinder.
Accordingly, a non-subsidised LPG cylinder price will go up from Rs 883.5 to Rs
921.5.
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BENTHAMS UTILITARIAN ARGUMENT
Jeremy Bentham founded the doctrine of utilitarianism. Its main idea is: The highest principle
of morality is to maximise happiness, the overall balance of pleasure over pain. According to
Bentham, the right thing to do is whatever will maximise utility. By utility, he meanswhatever produces pleasure or happiness, and whatever prevents pain or suffering. Bentham
arrived at his principle of utility by the following line of reasoning: We are all governed by
the feelings of pain and pleasure. We all like pleasure and dislike pain. The utilitarian
philosophy recognises this fact, and makes it the basis of moral and political life. [1]
In this project paper, the researcher tries to analyse the policy Cap on the LPG
cylinder supply on the basis of the ideologies of the jurist - Jeremy Bentham.
According to Bentham, the sole object of government ought to be the greatest happiness of
the greatest possible number of the community. [2] Bentham argues that maximizing utility
is a principle not only for individuals but also for legislators. In deciding what laws or
policies to enact, a government should do whatever will maximize the happiness of the
community as a whole. Community, as per Bentham, is a fictitious body, composed of the
sum of the individuals who comprise it. The interest of the community then is the sum of
the interests of the several members who compose it. [3] India is a welfare state. The main
duty of the government is to make policies for the welfare of the masses. Government
policies should promote the greatest good for the greatest number of people. However, the
decision of CCPA to reduce the cap on subsidised LPG cylinders to 6 is hurting every
kitchen. Now the Oil Marketing Companies have decided to revise the prices of LPG on the
first day of every month. This has added to the common man's woes as this means that the
consumers may be forced to pay even higher price in the future. This policy of the centralgovernment is anti-people and has hit the common man adversely. It is anarchy that has
prevailed in this country. The rising prices of LPG and inflation will not only make it difficult
to buy but also to cook food. There are some commodities which affect the society on a very
large scale in terms of economic as well as social fronts. Cooking Gas come under such
categories, it has direct relation to the last household of the country. Thus any increase in the
price of these commodities directly affects the life of ordinary people. This policy has hit the
middle class and the poor peoples household budget. The cooking gas is must for the daily
needs of any household and any restriction on its subsidy and supply cannot be justified. This
policy is not maximising the pleasure of the masses and is in fact giving them pain. So, in
Benthams view such policy should not be formulated for a welfare state.
73% of the Indians consider LPG subsidy necessary. [4] In the month of October, the price of
non-subsidised cooking gas was hiked by Rs. 127 per cylinder to Rs. 883.50. Thus, every
additional cylinder at non-subsidised rates will now cost (in the month of October) Rs. 883.5
in Delhi, Rs. 894 in Mumbai, Rs. 913 in Kolkata and Rs. 877.50 in Chennai. [5] To add to our
worry, the UPA government has said that in case of subsidised LPG, the prices of the
cylinder would vary from state to state depending on the taxes and levies imposed by
individual states. Here, the government talks of offering subsidies on cooking gas and at the
1Michael J. Sandel, Justice: Whats the Right Thing to Do?
2Jeremy Benthams Theory of Legislation. Translated by R. Hildreth
3
Michael J. Sandel, Justice: Whats the Right Thing to Do?4ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
5The Indian Oil Corporation data
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same time levies tax on these products in the market, than what is the meaning of
subsidising? Moreover, the subsidised LPG price has been hiked by Rs 11.42 per cylinder
following government decision to raise commission paid to the dealers from Rs 25.83 per
14.2-kg cylinder to Rs 37.25. As a result, subsidised LPG in Delhi will now cost Rs 410.42
per cylinder, In Kolkata Rs 412.42, in Mumbai Rs 434.42 and in Chennai Rs 397.92. The
commission paid on non-subsidised LPG too has been raised by Rs 12.17 to Rs 38 percylinder. Accordingly, a non-subsidised LPG cylinder price will go up from Rs 883.5 to Rs
921.5. All this have increased the plight of the citizens resulting in more problems for the
society already grappling with price rise and poverty. Jeremy Bentham professed that an
action may be said to be comfortable to the principle of utility, when the tendency it has, to
augment the happiness of the community is greater than any it has to diminish it. Similarly, a
measure of the government may be said to be conformable to or dictate the principle of
utility, when in the like manner the tendency which it has to augment the happiness of the
community is greater than any which it has to diminish it. [6] The LPG cooking gas
limitations enforced by the government and the ever increasing price for additional
requirement has hurt the poor (lower class), middle class and upper middle class financially.
Nobody can survive today without a gas connection. By restricting the number of cylindersthe government is only troubling the common man. This policy of the government has the
greater tendency to augment the sorrow of the community than any which it has to diminish
it. Bentham would never have agreed to such a policy being implemented at all because
according to him, it is the greatest happiness of the greatest number that is the measure of
right and wrong. [7] As such this policy would be wrong from the Benthamite point of view.
For Bentham, the quantity of happiness was the deciding factor. He said that a law should be
judged good or bad depending upon whether or not it increased general happiness of the
population. This policy of the government fails to increase the general happiness of the
majority of the population. The government stands isolated with 93 per cent of Indians saying
that the policy is unjust. [8]
The business of government, according to Bentham, is to promote the happiness of the
society by furthering the enjoyment of pleasure and affording security against pain. The test
of good government is not natural right, but the general happiness of the governed. [ 9] The
government of India has overlooked the severe consequences that the policy may have on the
people. On an average, a cylinder lasts for a month in most homes. According to a survey
report, 70% of the Indians say that they consume 1 cylinder a month while 12% say that they
consume 2 cylinders in a month. [10] This will mean that annually the extra expenditure on
cylinders alone will be more than Rs 5,000. India is a country in which 65.0% of the urban
population uses LPG for cooking purpose, while 11.4% of the rural population uses LPG forcooking. [11] A majority of the Indian population are either self-employed, salaried earner or
casual labourers [12] and as such it becomes very difficult on their budget to sustain the ever
increasing prices of commodities especially commodities like cooking gas, which is a
necessary requirement. The government policy on capping the supply of subsized gas
cylinders limited to 6 is too less and it has hit the household budget of many. Multiple pricing
6Extract of Bentham The principles of morals and legislation
7 Extract from the book A Fragment of Government by Jeremy Bentham (published in 1776)
8ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
9Jeremy Benthams Theory of Legislation. Translated by R. Hildreth
10
Ibid.11Indian Census report 2011
12http://indiatoday.intoday.in
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of cylinders, with the possibility of price variation every month, has also put consumers in a
spot. This has added to the worry. According to a survey report, 73% of the Indians feel that
12 cylinders a year should be the limit on subsidised LPG supply per household. [13] Thus, in
evaluating this policy according to Benthams theory, it is found that the UPA government
has failed to perform the business of government, which is to promote the happiness of the
society. Subsidy in cooking gas is a basic welfare policy that the government is obliged toprovide for the benefit of the people. However, this legislation by the government has worked
like drilling holes into common mans pocket.
Bentham argues that the legislator is an interpreter and a servant to the people. According to
him, a good law conforms to the general expectation. The legislator must understand the
direction of expectation, for the purpose of acting in concert with it. Bentham further asserts
that, good laws are those for which good reasons are assignable. Bentham believes that
laws should include a promulgation of reasons. Explaining the reasons would allow the law
to be more easily understood. Therefore, the legislator must demonstrate that a law is
conformable to the principal of utility; in order to do so, a reason must be given to every law.
The government of India in making this policy had said that capping of cylinders will lead toreduction in misuse/diversion of subsidized cylinders and it will also reduce the under-
recovery of OMCs [Oil Marketing Companies]. Oil PSUs have been cribbing, about under-
recovery of their costs in selling petroleum products including LPG, however, neither the
government nor the oil PSUs have revealed their cost details. That is to say, what are the
materials cost, conversion costs (direct costs) per unit of their output and what are their total
fixed costs, with comparatives over last 5 years and explanations to the consumers about the
variations in such costs, under-recoveries etc. This is the minimum the Govt should disclose
to consumers before making any policy. The case of LPG shows something deep that is
unseen. First, limit of 6 subsidised cylinders per customer then the price of unsubsidised
domestic cylinder was priced at Rs. 734-735. Later government removed Custom and excise
duty on uncapped domestic cylinder and this should bring down the price to around Rs. 640
(Rupees 97 was the Custom and Excise duty). [14] However, now within a month the oil
companies have raised the price of uncapped domestic cylinder to Rs. 883.50 plus. Now
where is transparency in this? What international price went up? And when did it go up? And
what is the effect of reduced Rs Vs USD exchange.
Bentham argued that, In accordance with the principal of utility, [the legislator] ought never
to impose a burthen but that he may confer a benefit of greater value. [15] The rationing of
subsidised LPG cylinders will lower the central government's fiscal deficit for this financial
year only by 0.2% [16] but the effect of the policy or the burden on the people is far greater.
The government has targeted a commodity that will directly hit the common man. It isabsolutely unjustified on the part of the government to raise the price of an essential good i.e.
cooking gas.
In determining whether an action (or rule) conforms to the Principle of Utility, we must
consider these factors:
1. Intensity 2. Duration
13ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
14http://zeenews.india.com/business/news/economy/duty-on-non-subsidised-lpg-waived-7th-cylinder-to-cost-rs-97-
less_60778.html15Theory of legislation by Jeremy Bentham
16http://www.financialexpress.com/news/diesel-price-hike-will-lower-fiscal-deficit-by-only-0.2-says-finmin/1002760/
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3. Certainty 4. Proximity
5. Fecundity 6. Purity
7. Extent
The researcher would now examine each of these with the issue under discussion.
Intensity: How intense will the pleasure or pain produced by the action be? How severe
is the suffering resulting from the action?
The suffering of the people as result of this policy is very severe. The cap on subsidised gas
cylinders is too less. India is a country in which 65.0% of the urban population uses LPG for
cooking purpose, while 11.4% of the rural population uses LPG for cooking. [ 17] A majority
of the Indian population are either self-employed, salaried earner or casual labourers [ 18] and
as such it becomes very difficult on their budget to sustain the ever increasing prices of
commodities especially commodities like cooking gas, which is a necessary requirement.
This policy is very harsh, it is an unjust step taken by the government, having total disregard
for the welfare of the people. With the government increasing the price of subsidised LPGalso, people fear that a time is not far away when the subsidy on LPG would be of no
practical benefit to the people at all.
Duration: How long will the pleasure or pain last?
The pain suffered by the people is permanent. Every household would get only 6 subsidised
cylinders a year, which according to a survey report, on an average lasts 1 month. So the
people will have to buy at least 6 cylinders at market price, which according to the Oil
Marketing Companies would vary every month. This month itself the prices of LPG has been
changes twice so far. At the beginning of this month the price of uncapped LPG was raised
from Rs.745 to Rs.883.50, but soon after the price was again increased from Rs. 883.50 to
Rs.921.50.
Certainty: Will the action produce the pleasure or pain you suspect? How guaranteed is
the pleasure/pain? How confident are you that the intended consequences will be the
actual consequences?
This policy is very certain to produce pain, to larger extent of people, as I have already
illustrated above. Except the UPA government itself, none are supporting this policy. Neither
the people nor any political parties have accepted this decision of the government. This
policy has been strongly criticised as being anti-people.
Proximity: How long a delay will there be between the action and the resulting pleasure
or pain?
There is a direct proximity between the policy and the resulting pain of the people.
17Indian Census report 2011
18http://indiatoday.intoday.in
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Fecundity: Fecundity means productiveness. A productive pleasure is one which is
likely to be followed by other pleasure of the same kind and a productive pain is one
which is likely to be followed by other pains of the same kind.
This policy is a productive pain for the people as it is likely to be followed by other pains of
the same kind. Easy fluctuation of LPG prices has only added to peoples worry. This policyonly serves the governments requirement and it totally disregards its effect of on the masses.
Purity: A pure pleasure is one which is not likely to produce pain. A pure pain is one
which is not likely to produce pleasure.
This policy is a pure pain to the people, which is not likely to produce any pleasure. This
policy is a mixture of more negative (greater suffering of the people) and less positive
(benefit to the government from the deal).
Extent: How many people are affected by this pain or pleasure?
This policy of the government fails to increase the general happiness of the majority of the
population. The UPA government has not been realistic in fixing a cap on subsidised LPG.
The government stands isolated with 93 per cent of Indians saying that the policy is unjust.
[19]
19ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
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CONCLUSION
Utility or interest of a community, according to Bentham is based on the notions of good and evilthrough recognition that evil is pain, or the cause of pain and that good is pleasure, or the cause of
pleasure.
Welfare of society as a whole is not really served by the exorbitant prices charged in hard times. Cap
the number of subsidised LPG cylinders at six per household a year is a very harsh policy, havingcomplete disregard about the effect of such policies on people. If the prices of essential goods have tobe hiked then the Price rise of any such product always has to be in phases. You cannot increase theprice of an essential commodity by 85% at one time; gradual price rise helps in absorbing thesechanges for the common people.
A slab system with a marginal hike in price for extra cylinders can be implemented, because for theaffluent, paying inflated prices for a cylinder of cooking gas may be annoyance; but for those ofmodest means, such prices pose a genuine hardship. This proposal rationalizes the move on theground that the present system does not differentiate between the needy and those who can afford topay market price. In the present system even a billionaire get 6 cylinder of cooking gas at subsidisedrate.
Cooking gas price rise also hamper Governments plan to promote the use of clean fuels for cookingin rural areas since people would not prefer costly cooking gas to other cheaper domestic alternatives(i.e. woods and uplas).
We must also stop misuse of subsidized LPG in cars, water heaters and small hoteliers/eateries. Thegovernment can initiate following steps.
1. Change the colour of commercial LPG cylinders to Yellow2. Start a billing system showing cylinders booked in past 12 months3. LPG consumer-card should have names of those having "Adhar Card number"
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APPENDIX
SOURCE: ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
SOURCE: ibnlive.in.com/news/india-rejects-upas-reforms-even-pm-poll/295839-37-64.html
__________________________________________________________________________________
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SOURCE: Census report comparison (2001 and 2011)
The use of LPG for cooking purposes has increased in the past 10 years. As per the 2011 censusreport 55.8% of the total population has kitchen at home. 28.5% of the total Indian population usesLPG for cooking purposes whereas 49% of the population still uses firewood for cooking. 65.0% ofthe urban population uses LPG for cooking purpose, while 11.4% of the rural population uses LPG forcooking.
_________________________________________________________________________________
SOURCE: http://indiatoday.intoday.in
Report dated: March 2012
This graph shows that a majority of the people from lower class and middle class are either - selfemployed, salary earner or casual labourers. Their income as such is fixed or not much, and there isalready a burden on them because of the ever increasing inflation rate. At this point the cap on
subsidised LPG and the ever increasing rates of uncapped cooking gas has come as a big blow to thecommon man. Hike in the price of LPG cylinder time to time and allocation of mere 6 subsidized
cylinders to a family in a year has really upset the homely budget.
http://indiatoday.intoday.in/http://indiatoday.intoday.in/ -
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SOURCE: CNN-IBN Urban India Opinion Poll:(http://www.rediff.com/news/slide-show/slide-
show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htm)The poll was conducted in six cities - Delhi, Mumbai, Kolkata, Chennai, Ahmadabad and Lucknow.
Major findings of the survey:1. Is the govt justified to limit subsidised LPG cylinders?
NO: 93%YES: 6%Can't say: 2%
2. What should be the limit on subsidised LPG cylinders?6 cylinders a year: 3%15 cylinders a year: 8%8 cylinders a year: 11%12 cylinders a year: 73%
3. Does limiting discounted cylinders help manage economy?NO: 73%YES: 24%Can't say: 2%
4. Most negative factor against UPAPrice Rise: 50%Corruption: 34%
Ineffective governance: 12%
5. What concerns you most?
Rising prices & inflation: 57%
Lack of safety and security: 7%
Corruption: 32%
http://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htmhttp://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htmhttp://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htmhttp://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htmhttp://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htmhttp://www.rediff.com/news/slide-show/slide-show-1-poll-93-per-cent-urban-indians-say-lpg-cylinder-cap-unjustified/20120927.htm