The burden of oil subsidies
Updated: Mar 31 2006, 05:30am hrs
Apropos your editorial Not in my backyard (March 28). The present administered price mechanism for sale of kero-sene, LPG and other petroleum products is not only inefficient but anachronistic, too.
The government can subsidise consumption of certain items, but cannot ask private players, like Reliance Indust-ries, to bear the cost of such subsidies by forcing them to sell kerosene and LPG at below market prices. Such subsidies must be borne by the exchequer. You have rightly hinted that the farce of oil pricing through an informal arrangement with the oil companies must end, sooner than later.
ln 1996, the cost of biscuits went up to Rs 37.50 per kg. The increase in cost was merely 25 paise, that too after a decades gap. There-after, the cost of wheat and of sugar went up. Yet, the cost of the biscuits was not increased.
The proposed Vat on tobacco is 4%, but on biscuits it is 12.5%. Why impose Vat on items like biscuits, the common mans necessity. lt is not a food item enjoyed only by the elite. In fact, certain varieties of biscuits are recommended by doctors for children as well as the elderly because they are easily digestible, nourishing, and reasonably priced.
While cold drinks, ice-creams, etc are cheaper, Vat on biscuits is not justified.
That politicians resign from a post when they are caught and claim it is a sacrifice has become a joke. This was evident by Sonia Gandhis resignation, too. Also, it would be worth compiling statistics on the assets of politicians.