Edits & Columns

Petro politics Government ought to play straight on oil   The government’s claim that the rejig of the tax regime on petroleum products will be revenue-neutral is not borne out by facts. On the contrary, our present reliance on petro taxes to fund the exchequer is only bound to increase. The precise numbers may differ but detailed calculations show the new regime will not be revenue-neutral. The additional burden will have to be borne by consumers — if the government allows the public sector oil retailers to raise prices of petro-products. Or, by taxpayers, if it does not. Both in his Budget speech and his subsequent interview with this paper, the finance minister was emphatic that there is no case for a price hike on account of the new tax regime. This is hard to accept. More so, when petroleum minister Mani Shankar Aiyer is reportedly rushing to the Cabinet for approval to raise prices on precisely the same grounds. So who is the ordinary citizen to believe? The finance minister, or the petroleum minister? The irony is, much of this would have been unnecessary, had successive governments held firm to the decision to dismantle the administered price mechanism for oil products. Today, unfortunately, the entire issue of oil prices has become mired in politics. Inevitably, the consequences have been adverse, with government sacrificing fiscal prudence at the door of political expediency. It is high time the government stopped playing these games with the consumer, as well as with the oil marketing companies. What is the point in throwing open the petro-retailing business to private participation, if policy is subject to constant chop and change and the dominant players, the public sector retailers, are forced to sell at below market prices? The private sector abhors government risk and uncertainty and this is exactly what the government is perpetuating. It has used the Lahiri committee report as a basis for determining the new tax rates, only to come up with a structure where rural India will pay more fuel taxes than a white-collar executive flying by executive class! The tax rates on aviation turbine fuel are lower than that on petrol and diesel. Further, instead of closing the gap between the diesel retail price and that of kerosene, it has been widened, thereby making diesel adulteration even more lucrative! And the tax-driven refinery margin on industrial fuels has been lowered. These are principally produced by public sector refiners, forced to bear a government-directed Rs 15,000 crore subsidy on below-cost sale of LPG and kerosene. What sense of equity is the government practising?

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