Do not hike petrol and diesel prices, tame price inflation

(Dr. krishan Bir Chaudhary)

The Congress Party led UPA Coalition government at the Centre is gearing up in a policy move which would see a steep rise in petroleum and diesel prices in this month. The farmers of the country would like to caution the government not to do so especially in the current situation of rising prices. It is high time that the government put up efforts in reining in the rising prices which has burdened the poor in the country.

There is no doubt that the global prices of crude oil is rising due to the disturbed situation in the Arab world. Political instability in this region had pushed the average crude oil prices for the Indian basket to $110.4 per barrel in March 2011. Instead of passing on the burden to the farmers and the common man the government need to rationalize the fuel tax regime in the country which would benefit both the domestic oil companies and the common man.

At present customs duty on crude oil is 5% and on petrol and diesel 7.5%. The excise duty on petrol is Rs 14.35 per litre and that on diesel is Rs 6.60 per litre. Cumulatively the fuel taxes make up half the retail price of motor fuel. Crucial balancing act is needed on the part of the government to insulate the common man from the impact rising global crude oil prices. The fuel taxes should be brought down to a bare minimum if not zero, instead of contemplating for a steep rise in domestic prices of petro products.

But the Congress Party led UPA Coalition government at the Centre is in no mood to listen. It is determined to purse its anti-farmer and pro-corporate agenda at the behest of the international lobby and dictates of the IMF, World Bank and the USA. Elections in four states and one Union Territory is slated to be completed this month and government feels that it need not worry about the consequences of rising prices.

The Reserve Bank of India (RBI) in its monetary policy statement has highlighted the need to go ahead with full deregulation of fuel prices with diesel next on the table. The RBI Governor at the same time has said about the inevitability of commodity price rise in the near future. The Union Finance Minister, Pranab Mukherjee is interested in downsizing the subsidy to farmers and the poor.

The Finance Minister should know that reducing subsidy to farmers is not the right step. Subsidy should be better target to farmers. Huge stimulus package to corporates should be drastically reduced, futures trading in commodities should be banned, hoarding of commodities, black marketeering and corruption in public life should be brought under check and trillion dollar black money stashed away abroad in Swiss and German banks should be declared as national wealth and brought back in the country. These would be the effective measures for growth and development, reining in rising prices rather than cutting subsidy earmarked for farmers and the poor and hiking prices of petro products.


(Editorial : Kisan Ki Awaaz Magazine)