Special Correspondent

NEW DELHI: Rejecting the “callous defence” by Prime Minister Manmohan Singh of the decision to increase indirect taxes on diesel and petrol, the Communist Party of India (Marxist) on Wednesday reiterated its demand that the move be withdrawn.

Dr. Singh's justification of the hike in terms of taking a long-term view reflected a “flawed economic thinking and insensitivity to the sufferings of the people due to price rise,” the Polit Bureau said in a statement.

It said estimates suggested that the government sought to mobilise between Rs.25,000 crore and Rs.30,000 crore in the forthcoming year through the increase in customs and excise duties on diesel and petrol.

On the other hand, Finance Minister Pranab Mukherjee himself announced in his budget speech that Rs.26,000 crore in revenue would be lost during the same period due to the cut in income taxes. “How come the Prime Minister is defending the indirect tax hike in the name of fiscal consolidation while turning a blind eye to the direct tax cuts?”

“What comprise ‘populist policies'? Having low indirect taxes on fuel, which is consumed by an overwhelming majority of the people, or doling out corporate tax concessions worth Rs.80,000 crore in one single year (2009-10) in the name of stimulus?”

“Miscalculation”

Terming a ‘gross miscalculation,' Dr. Singh's assertion that the impact of the fuel price hike would lead to only 0.4 per cent rise in the wholesale price index, the party said it did not take into account the impact of high fuel prices on food prices.