Reduce taxes

The steep hike in petrol prices, announced immediately after the announcement of results of Assembly elections in some states, shows the opportunistic and political nature of the decision. If rising crude prices in the international market, the finances of the Indian oil marketing companies and the subsidy burden borne by the government were issues of serious concern, the government should have had the courage to raise the retail prices earlier. The last hike was in January and even before the common people could absorb that hike and adjust their personal budgets to the new reality, they have been administered another blow. The concern over the rising subsidy seems to be disingenuous. What is real is the continuing practice of maximising government revenues even at the expense of the finances of the common people.

It is wrong to claim that the high petrol prices affect only the well-heeled sections of the population. The number of people who use two-wheelers is many times that of those who have cars. The quantity of petrol used by scooters and motor bikes, which have become means of conveyance for large numbers of average Indians, is much more than that used by cars. The hike hurts them badly. Apart from the fact that the increase is directed at those who can ill afford it, the truth is that the hike in price is avoidable.

The tax component in the price of fuels is very high. This is close to 50 per cent in some states, including Karnataka. Instead of passing on the burden of high prices to the consumers, the government can reduce the taxes on petrol, diesel and their products and absorb a major part of the rise in international prices. There are levies imposed by both Central and state governments and if they forgo a part of their revenues the common consumers can be spared the burden of hikes. Both have consistently refused to do this. Even states which criticise the Centre for the hike in fuel prices have been averse to cut local levies.

It has also been pointed out that there is much scope for oil marketing companies to increase their efficiencies and bring down costs. The figures of losses and under-recoveries  have also been questioned. It is wrong to make the people pay for the inefficiencies of oil companies. The government should withdraw the heavy hike and cut the taxes, if necessary, to help the OMCs.

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