People's Democracy

OIL PRICE HIKE

UPA Govt Insensitive To People’s Sufferings: CITU

ACCORDING to a statement issued by the secretariat of the Centre of Indian Trade Unions (CITU) from New Delhi on November 5, the hefty hikes announced in the prices of petrol, diesel and cooking gas by the UPA government confirm the popular perception that the present regime meekly continues to traverse the same path as the previous NDA dispensation, unmindful of the sensitivities of the people who had been put to immense hardships and sufferings by the retrograde economic policies. It is an irony that the actual hike had come about when the international oil prices are showing signs of decline. That this decision had been hailed as “biting the bullet” by the reforms savvy academics and the media, with the same glee as they did with “India Shining” campaign of the NDA regime, is revealing.

The CITU statement pointed out that the government has chosen to turn a deaf ear to the plea to peg its customs and excise revenues on oil products with zero nominal increase. It seems that the finance ministry cannot resist the temptation of utilising the buoyancy in its revenue on account of surging prices of oil import, for its fiscal management. In the process the government has totally ignored the report of the standing committee on petroleum and natural gas (presented in the parliament on August 20, 2004) regarding the pricing of petroleum products, which, inter alia, recommended the removal of customs duty on LPG and excise duty on kerosene. The committee had also opined, very sensibly, that charging excise duty on subsidised product is an anomaly.

Though the government had spared kerosene from the present exercise of price hike, the deadline decided earlier for completely phasing out the subsidy element in respect of both kerosene and LPG stands as it is. To the CITU, this confirms the apprehension that this ‘benevolence’ is also likely to vanish sooner than later. The government needs to be reminded that as kerosene is not imported, there would be no financial loss to the public sector oil companies or the government if its price is left untouched.

In so far as LPG and kerosene are concerned, the fact is that, as pointed out by the standing committee, there would be a loss of about Rs 600 crore to the exchequer in the event of zero customs duty on LPG and removal of excise duty on LPG and kerosene would entail a loss of Rs 2600 crore. But this total loss of Rs 3200 crore can well be made up by the cess collected by the government on crude oil produced by the ONGC and OIL at the rate of Rs 1800 per metric tonne, as this cess would give the government a total of Rs 5400 crore. If the above recommendations were implemented, the only loser would be the biggest private sector refinery at Jamnagar whose refining margin would be reduced only marginally. The CITU statement queried: Is that what the government seeks to avoid by imposing this hefty burden on the people, with the accompanying severe inflationary pressure on the economy adversely affecting all concerned?

The CITU remarked that these facts fly in the face of the government that is crying hoarse over the ‘loss’ faced by the oil companies in the absence of a hike in oil prices. There is an urgent need of scrutinising the profit margin vis-à-vis the actual refining cost and the wisdom of allowing unhindered profit to oil companies, and continuing the bonanza enjoyed by the Jamnagar refinery (of the most favoured Reliance group), as a windfall from the global price hike, at the cost of burdening the consumer and the economy with such a price hike.

The CITU has urged the government to revisit the present step to increase the price of petroleum products and roll back the same.