A greater burden on the poor
The government did what was inevitable in its scheme of things by announcing a hefty rise in the prices of diesel, LPG and kerosene. To the credit of Ms Mamata Banerjee, the Trinamul Congress chief and West Bengal’s chief minister, it must be said that she was the only chief minister to remove the state cess completely to lessen the
burden on LPG consumers in Bengal who now will pay `16 less per cylinder. The other states have maintained a stony silence.
The worst sufferers will be consumers in Maharashtra where the state taxes are the highest in the country. What is disheartening is that whilst hiking the rates the Centre did nothing to cushion the blow to the finances of the middle- and economically-weaker classes of society. The result is that the richest man in the country and the poor will pay the same price for diesel and bear the same burden of the fallout of the hike in diesel prices. Truckers, who transport daily needs ranging from vegetables to fruits and other essentials, will hike their tariff. This will have a snowballing effect on prices. The Reserve Bank of India had in its latest rate hike mentioned that it had not taken into consideration the impending hike in diesel, LPG and kerosene. Of course, the Centre has claimed that it will forgo around `42,000 crore because of the loss it will incur by reducing the customs and excise duties, which are Central taxes, in bearing some of the burden of rising crude prices.
What is intriguing is that we in India pay much more for petrol than people in, say, New Jersey in the US. They pay around $3.85 per gallon (around four litres), which means about `45 per litre. Why is it that we pay `70 per litre? At what price are the oil companies purchasing crude? Are they paying more than what the US pays for its crude? Moreover, we are closer in distance to Saudi Arabia than the US is, yet it seems we are paying more for crude than the US. Is this a fact? There should be a persistent demand for the government to come out with a white paper on how it buys crude, and at what price. If they are paying more for crude than what the US is paying, we should know why. At the least we should know the way prices are computed. For instance, what is the conversion cost of crude into petroleum products? One understands that it is quite high, at around $10 a barrel. Is this a standard cost or is there some gold plating? If it is too high, can it be brought down?
One interesting fact is that despite the government raising fuel prices there are no signs of a fall in offtake from the fuel pumps, which shows that there is enough money with a certain class to ignore any hike. It is India’s poor, the vast army of daily wage earners and those who earn meagre salaries with insufficient hikes to meet the rising cost of living, who will be the worst sufferers.
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