Stoutly defending the economic rationale of his budget proposals for 2010-11, Finance Minister Pranab Mukherjee on Friday ruled out a roll-back of the hike in excise duties and prices of petrol and diesel, saying the “financial condition does not permit me to do so.”
In his reply to the two-day general discussion on the budget in the Lok Sabha, Mr. Mukherjee rejected the Opposition demand for withdrawing the increase in excise duty — at least on diesel — effected last month. “I would have loved to respond to the demands [of the Opposition] but my financial condition does not permit me to do so. Please excuse me.” he said.
Following a failed last-ditch effort by BJP leader and former Finance Minister Yashwant Sinha for a review of the tax proposal on diesel in view of its cascading effect on prices, the entire Opposition, including the Bharatiya Janata Party (BJP), the Left Parties, the Samajwadi Party, the Rashtriya Janata Dal and the Bahujan Samaj Party (BSP), walked out in protest just as Mr. Mukherjee completed his reply.
At the time of the budget presentation too on February 26, the Opposition had walked out from the Lok Sabha without listening to the Finance Minister's full speech when he announced restoration of the basic customs duty of five per cent on crude, 7.5 per cent on diesel and petrol and 10 per cent on other refined petroleum products. He had also raised the excise duty on petrol and diesel by Re. 1 per litre each.
In a pointed reference on Friday, Mr. Sinha asked the Finance Minister whether the government would consider withdrawing the “dangerous proposal'' — that has already been implemented — to hike the prices of petroleum products, especially diesel, but Mr. Mukherjee refused to budge.
Mr. Mukherjee conceded that the hike in the prices of petrol and diesel would have some inflationary impact — to the extent of 0.4 per cent — but noted that there was no other way out. “Let us see how it goes.”
Pointing out that inflation was an integral part of the economy, the Finance Minister said all factors were taken into consideration when the budget proposals were drafted. He went on to spell out the “corrective economic measures”' taken by the government to curb inflation, including reducing import duty, improving supplies, and subsidising edible oil and pulses for the economically weaker sections.
The economy, Mr Mukherjee claimed, had turned around and there was no longer any uncertainty. Despite the deficit monsoon and the drought situation in large parts of the country, a 7.2 per cent growth rate as projected “was not a pipe-dream but a reality.”