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Unprecedented hike in petrol prices: Unfair of  PM to blame previous governments

From Devsagar Singh

Unprecedented hike in petrol prices: Unfair of  PM to blame previous governments

New Delhi, Feb 19:It is unfair on the part of the Prime Minister to blame the previous governments for an unprecedented rise in fuel prices in the country.  Speaking at a function on Wednesday, the PM said that the middle class would not have been burdened by high fuel costs if previous governments had focused on reducing India’s dependence on crude oil imports. The question that begs an answer is what is the present Government doing to mitigate the suffering of people. Petrol and diesel prices have gone up abnormally. Their prices have risen for the tenth consecutive day yesterday. Petrol has touched Rs 100  per liter in some states.

         It is well known that a major reason for such a high increase in fuel prices is the sharp increase in excise duties on petrol and diesel to make up for the shortfall in revenue from other indirect taxes due to lower economic activity during the pandemic. It is in the Government’s hands to reduce the excise duty and give immediate relief to people.  The larger issue of reducing import dependence can take its time. It is a double whammy on the people who are already suffering from loss of income and employment. It is nobody’ case that the excise duties be lowered permanently. The oil producing and exporting countries are under renewed pressure to increase output. It is expected that once the production is up, the world crude prices will come down. The Government can think of restoring the duties again.

        The Government and the ruling BJP may surely be aware of its political cost. The unbearable fuel costs have affected everyone, including the rural population, the backbone of the BJP support base. The Government may ignore the situation at its own peril. Four states—West Bengal, Assam, Tamil Nadu, and Kerala— will be going to the polls this year. The ruling BJP at the Centre may be aware of the outcome in Tamil Nadu and Kerala. But it is a strong contender in  Assam and West Bengal. By ignoring the fuel hike, the BJP may be taking a risk. A hike in fuel costs is bound to cause inflation even in the short run. Prices of commodities may begin to rise on the eve of elections in these states. One hopes the BJP/RSS combine prevails upon the Government to act before it is late.

            The familiar argument that the excise mop up helps other social sectors like healthcare and education to run their services will not count beyond a point. The Government is, no doubt, in a sticky wicket this time, its finances in very bad shape already. The GST and customs duty collections are estimated to be lower by 25 percent and 18 plus percent, respectively. Direct tax collections, it is feared, are also set to come down.

          Finance Minister Nirmala Sitharaman has said the Government’s inflation target may have to be reviewed. Clearly, there are apprehensions in the RBI and the ministry of finance. For the man on the street, inflation will be an additional tax. The Government must think of an out-of-box measure to bring fuel prices down in order to prevent the image of Prime Minister Modi from getting dented.

 

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