While addressing a rally in Mumbai last month in connection with the 38th Foundation Day of the BJP, an announcement made by party president Amit Shah had become big news.
He had said that the fuel prices would be brought under the Goods and Services Tax (GST) in the near future thereby significantly reducing the petrol and diesel prices. When a journalist reminded Shah about this promise two days ago, he was unduly annoyed. It was about the secret of retaining the fuel price steady without any change during the election campaigns in Karnataka, which the journalist asked playfully. When that press conference was being held, which described the circumstances in which Yeddyurappa was compelled to resign after having left with no choice seconds before the confidence vote, fuel prices had reached an all time high. At the time of election, fuel prices, which were held steady for almost three weeks with the help of oil companies, are now surging at rocket speed. With the price shooting up continuously for the tenth day, the petrol and diesel prices have crossed Rs 81 and Rs 73 per liter respectively in Kerala. Considering the global and national scenarios, the prices are likely to increase again. The fact that apart from certain announcements, there has been no move on the part of the government to face this crisis, is a clear indicator as to whose side our government is leaning to.
India has the highest fuel prices among south Asian countries. The rise in crude oil prices in the global market, production cuts by different countries and appreciation of the dollar are usually cited as the reasons for the price hike. There are several contradictions in these explanations by the authorities. This fact will be easily comprehended if the fuel price in 2013 – in a situation akin to the present scenario - and the price in the global market are compared. It was when the price of crude oil reached $ 124 per barrel that petrol price exceeded Rs 75 per litre. Today, even when the price of crude oil is said to increase, it is only $ 80. Also, when the crude oil price had touched $ 40, the government was reluctant to reduce the fuel prices in the country. In short, the prices here are not determined according to the fuel prices in the global market alone. This is where the murky tales surface of the unholy nexus between the corporate oil companies and the government. It is an indisputable fact that the fleecing in oil openly began in the country when the second UPA government in 2011 gave the right of determining the fuel prices over to the oil companies. The Modi government that subsequently came to office acted in a way adding fuel to this fire. Earlier, the fuel prices were revised every two weeks. It was changed to a daily basis last year, speeding up the swindling. Besides this, the excise duty was also hiked – in fact nine times after Modi government came to power. It was cut by Rs 2 per litre following a huge hullaballoo in October last year. The problem at present is charging excise duty without any specific norms. While the central government levied 9.5 per cent of the basic rate as an excise duty on petrol in 2013, it has now been raised to 19.5 per cent. The duty has been raised to 105 per cent in five years. Similarly, the state tax has also been raised to 28 per cent. The Centre earned an additional Rs 2.7 lakh crore last year alone through this levy hike. The central government is now making attempts to save its face by announcing a meager relaxation in this excise duty.
It is even as Modi and colleagues boast about the country being the world's sixth richest country, that the people are destined to end up burning in the oil fire. Clearly, the gains of economic growth which the government celebrates and propagates, does not reach the common man. And who doesn't know that all the reform measures introduced by Modi government ever since its assumption of power have brought only hardship to the common people! The fact is that the nation has not yet recovered from the blow inflicted by the 'reforms' right from demonetization to GST. By now, experts in the field have given the indication that the country is moving towards grave financial crisis. The continuing depreciation of the rupee against the dollar is seen as a clear index of this. Hike in fuel prices will naturally lead to rise in prices and inflation which in turn is bound to affect the financial stability of the country. The first thing to be corrected is the policy of levying the maximum rate of tax from fuel price. Even though that may fill the government coffers, it is a burden to the people. As Amit Shah commented bringing fuel prices also under the umbrella of GST and unifying tax is the most scientific solution. The question is whether this government has the willpower to do it. Also, people will be quick to see into the gimmick if any of declaring marginal concession in excise duty.