Excerpts from an imaginary tete-a-tete with the CPI(M) leader Sitaram Yechury on his suggestions on the oil pool deficit. Yechury's answers are largely drawn from his article in a leading daily a few days ago and his pamphlet on the oil pool deficit.

Q. Mr Yechury, how can your party, which supports the Government, threaten to launch a country-wide agitation in case petroleum prices are hiked?A. We support the Government because we wish to keep communal forces at bay. But the Finance Ministry's suggestions of hiking prices of kerosene and diesel will hit the working classes.

Q. But what is the alternative to increasing prices?

A. You've also fallen into the Finance Ministry's trap. The point is that the oil pool deficit came about because the Finance Ministry has been appropriating money from the oil pool account to finance its profligate expenditure. They've appropriated Rs 13,329 crore since 1989.

Q. The profligacy you talk of is really expenses on huge subsidies, including PSU losses.

A. What I'm advocating is a tighter regime in which waste and leakages are checked. I also don't see any rationale in giving huge tax concessions to the rich. Do you know that the Budget gave them concessions of Rs 20,000 crore?

Q. But the fact is that we subsidise diesel by Rs 1.97 per litre and kerosene by Rs 5.18 per litre. A. Nonsense. The prices are high because of the high import and excise duties the Finance Ministry collects. Last year it got Rs 17,560 crore. Q. But unless you square up the deficit, the oil companies will not have enough funds to invest in exploration.

A. The Finance Ministry has a vested interest in higher imports because it gets more levies. It is because of this that we did not carry on with the policy of actively exploring for more oil. Instead, the World Bank, the oil MNCs such as Enron, the Petroleum Ministry and the Finance Ministry have evolved a consensus that India should meet 50-60 per cent of its oil needs through imports. The game is to starve oil companies of funds -- hand over the oil fields of ONGC to MNCs while starving ONGC of funds. Q. You're recommending cuts in excise and import duties. But if the Ministry of Finance does not get the Rs 19,675 crore it has budgeted for, then something else will have to be taxed and you will oppose this.

A. We will oppose only taxes on items consumed by the common man. There is enough scope to tax the rich.

Q. Please elaborate.

A. We sell 1.6 lakh diesel cars a year and 1.5 lakh luxury cars. If you tax these by Rs 1 lakh each, you'll get Rs 3,100 crore. If you tax captive diesel generating sets, you'll get another Rs 1,000 crore. The cost of generating power through DG sets is under Rs 3 as compared to the Rs 4 that is charged commercially. There's a host of such taxes that the rich can and must pay for. See my pamphlet on this.

Q. If we actually sold 1.5 lakh luxury cars each year, I don't think either Daewoo or the other new entrants would be complaining! Besides, if you levy a tax of Rs 1 lakh on them, no one will buy them as it just won't be economical any more.

A. I don't agree. There is a tremendous scope to tax the rich. The problem is that the government is pro-rich and doesn't really want to tax them.Q. The giveaways you're talking of in the form of lower taxes are really to make the economy more efficient and low-cost. Besides, we've all seen how direct taxes have gone up as a result of lower rates.

A. Nonsense. First, if you have good enforcement and actually want to catch tax-evaders, you can always catch them. I also disagree with this emphasis on costs all the time. The fact is that big business has gained a lot from the new economic policy and should be asked to pay this back.

Q. So what you're saying is squeeze what you can from the rich, and only then talk of ending the poor man's free lunch.

A. With the kind of poverty we have in the country, he doesn't get to eat lunch.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.