Fuel price hike to stay, says FM

“I would have loved to respond to the request of opposition (for a roll back of duty hikes in petroleum products). But the current financial condition does not permit me to do so. Kindly excise me,” Finance Minister Pranab Mukherjee said while replying to two-day long discussion on the General Budget 2010-11 in the Lok Sabha.

As Mukherjee rejected suggestion made by the senior BJP leader Yashwant Sinha that government could at least roll back duty hike on diesel as it would have a cascading effect on the economy the opposition parties staged a walk out.

On the day of presentation of the Budget 2010-11 last month the entire opposition walked out of the house as soon as Mukherjee announced duty hike on petroleum products.

Responding to opposition allegation that hike in excise duty on wide range of products would further fuel inflation, he said one had to appreciate circumstances which prompted the government to effect hike in duty rates.

He explained that the government only effected hike in duty on petroleum products, which were earlier in vogue, and went for partial roll back of Excise duty on certain categories of products keeping the fiscal consolidation of the economy in mind.

“The year 2008-09 was a difficult year with the global slowdown impacting the economy. Therefore, we had to go for various stimulus packages worth Rs 1,86,000 crore to revive the growth rate,” he said. “In the process the overall fiscal deficit (difference between government expenditure and income) has gone up. High level of fiscal deficit will not be sustainable. Therefore we have to go for fiscal consolidation while promoting growth at the same time,” Mukherjee said.  

Social sectors  

Brushing aside the opposition allegation that the Budget 2010-11 was “anti-poor and anti-farmer” and had no concern for “Aam Admi” (common man) Mukherjee rolled out statistics to drive home the point that massive funds have been allocated on wide range of social and agricultural sectors benefiting people at large.  

Dwelling on state of economy he said the economy has turned around and there was no longer uncertainty, despite the deficit monsoon and the drought situation in several parts of the country. “We can most humbly claim that there is a turnaround ... 7.2 per cent is not my pipe-dream, but it is reality. The situation of uncertainty is no longer relevant,” he asserted.  Significantly, Mukherjee indicated about government’s tax reforms in the coming months.

“I have not opted for any shortsighted or short-term policy. Tax reforms are urgently required,” he said while seeking cooperation of opposition parties to push forward tax reforms.

On the proposed Goods and Service Tax (GST), he suggested that the rates should be reduced while the base be broadened with limited exemptions so that taxes on both goods and services remain at the same level.

“We have asked the states to narrow down the existing gap so that 28 states can arrive at consensus on Excise and Service tax,” he noted.