The editorial views on keeping petrol/diesel prices low for the consumer are debatable (Editorial – “Slow creep”, September 13. Low fuel prices discourage people from using public transport such as buses and trains. At least as far as Bengaluru is concerned, for less than the cost of a bus ticket, people use their two-wheelers. Unless the cost-benefit ratio is heavily in favour of public transport, it is difficult to wean them away from using their own transport. This is borne out by the fact that the surge in metro passengers after both lines were commissioned is simply a transfer of traffic which was carried by the BMTC to the metro. The BMTC has seen a drastic reduction in its collection. That means that there are not too many people who have switched to the metro abandoning their personal transport. We have not seen any reduction in traffic jams either due to the metro. I would say that there is a case for a massive increase in fuel prices and for the use of this extra revenue to reduce bus fares to nil if possible. Of course it will be political dynamite!
N.K. Raghavendran,
Bengaluru
It is surprising that the sky-rocketing prices of petrol and diesel have not upset citizens. Of the per litre retail price of ₹67.01 for petrol in say Chennai, about half goes into the government’s coffers as taxes. The revenue thus collected forms a very substantial portion of the government’s overall revenue and comes as a windfall for it to fuel its runaway expenditure. Prime Minister Narendra Modi’s 2014 election promise that he would bring down the price of fuel by half is being followed more in the breach than in observance. He seems unaware that the price of a litre of petrol costs about half of the neighbourhood, and even less in America. High fuel prices affect not only the middle class and the poor, but also core sectors such as fertilizers, power and steel. The government should lose no time in scaling down its draconian taxes on petrol and diesel and see that they are available to people and the industry at fair international prices.
Kangayam R. Narasimhan,
Chennai
The pricing of petrol and diesel was deregulated in 2010 and 2012 mainly to eliminate the huge subsidy on this account which was a big drag on the exchequer. When the government followed an administered pricing policy, the difference (surplus or deficit) between the landed cost and market price was either added or deducted to the oil pool account. From June 16, oil marketing companies were granted the right to price petrol and diesel on a daily basis. Since the advent of daily pricing, the price of petrol is spiking steadily. The very purpose of introducing daily pricing was to align the domestic retail price of petrol and diesel to the international price of crude oil. But the reverse is happening in India. Even when crude oil price is falling in international markets, the price of petrol and diesel is increasing in India. For instance in 2011, crude oil price was $105 and the price of petrol in India was ₹68. On the other hand, today, when the crude oil price is around $50, petrol price is around ₹72. It is now crystal clear that the government is using the daily pricing policy to drain our pockets without any political backlash. What is intriguing is that this move is carried out without any red flags being raised by the mainstream political parties. The main factors to blame are excise duty being levied by the Central government and VAT paid to the State government. On one litre of petrol sold for ₹72 the excise duty comes to ₹21.48 and VAT ₹17.24. When the NDA government assumed office, excise duty was ₹9.07 which it has raised to ₹21.48 gradually. It may also be noted that petroleum products are deliberately kept outside the ambit of GST to squeeze the public. The worst hit by the policy are taxi operators who make a living by self employment. The public transportation system is also paying a huge price for the exploitative action of the central government.
Philip Sabu,
Mannuthy, Thrissur, Kerala
The benefit of lower prices in international crude is not being passed on to the consumer as committed by the government while switching over to daily pricing. The prime objective of daily pricing mechanism of petroleum products that the domestic prices need to be regulated along with the international prices has been defeated. The maximisation of profit and revenue generation from petroleum products has become the top priority for oil marketing companies. The policy has become a boon to the government and bane to the consumer. The high and irrational taxation on petrol and diesel is another burden on helpless consumers. It is surprising and shocking that the public and even the Opposition remain mute spectators despite the fact that oil companies are using an opaque policy. The claims of the government that transparency in policymaking is its core principle is a farce. Oil companies need to publish the formula and the factors that determine the price of the fuel.
N. Sadhasiva Reddy,
Bengaluru
I don’t agree with the argument that bringing petroleum products into GST will ensure lower taxes. What is the guarantee that the government will still not charge 100% tax under GST? When we have 28% + levies for certain goods already, why not 100% additional levy for petrol and diesel? I am reminded of the argument that our Chief Economic Adviser made before the Paris climate meeting —that India is increasing excise duty as an affirmative action towards managing climate change. At that point in time I was wondering whether he would continue to make that argument when crude price went up, but looking at what is happening now, it is shocking.
The other issue is the growth slowdown, which causes trouble to the projected fiscal deficit. The government needs to mop up money using all possible revenue streams and this is one of them. We the people have to pay for the government’s incompetence.
Ajith Ugiprasad,
Chennai
