(Weekly Organ of the Communist Party of India (Marxist)
June 03, 2012
HIKE IN PETRO PRICE
A Gigantic Fraud
AS this edition of People’s Democracy reaches our readers, the countrywide protest against the huge hike in the price of petrol called by the four Left parties would have taken place. The UPA-2 government has, however, turned a deaf ear to these massive protests, hartals, rasta rokos etc and has ruled out any rollback of this price hike notwithstanding feeble protests by some allies. The government continues to justify the hike, both as being necessary in order to meet the so-called massive losses of the oil companies and for improving the fiscal condition of the economy by tightening our belt as the PM said. More on this later.
The oil companies,
we are informed,
are reeling under huge ‘under recoveries’ of Rs 1,71,140
crores in 2011-12. The
country cannot afford such a huge loss, we are told. What are these under
are the difference between the retail
price of petroleum products and its import price. It is, hence,
notional in nature because the
import prices include duties, insurance, freight and other
levies. These are
not paid by the Indian companies
since what we import is crude oil that is processed in
Prior to the
foreign oil companies, petroleum products were sold, in
This fraud is reflected in an answer to a question in the Lok Sabha. The petroleum minister gave details of profit after paying tax of public sector oil companies. In 2010-11, the ONGC made a profit of Rs 18,924 crores, IOC – Rs 7,445, BPCL – Rs 1,547, HPCL – Rs 1,539 etc. Where is the loss? Whom is this UPA-2 government fooling by talking of ‘under recoveries’.
Let us now take the question of subsidies. The parliamentary standing committee report shows that the taxes and duties on petroleum products yielded the central government revenue of Rs 1,36,497 crores in 2010-11. Additionally the state governments earned Rs 88,997 crores. Thus totaling a whopping combined revenue earnings of centre and states of Rs 2,25,494 crores. The total subsidies paid by the central government to the oil companies, including the issuance of oil Bonds, amounted to Rs 43,926 crores. After all the subsidies are met, the central government is still left with earnings of a huge amount of Rs 92,571 crores. Who is subsidising whom, Mr Prime Minister? Who needs to tighten the belt?
As against the
international price of
Rs 23.17 per litre of petrol in 2009-10, we, in
These extra burdens on the people are being mounted to improve our economy’s fiscal health. The country is being told that our high fiscal deficit, scaring away foreign investors needs urgent reduction. Consider this: fiscal deficit now stands at Rs 5,21,980 crores or 5.9 per cent of GDP. The budget documents show that in the same year, the total tax revenue foregone (i.e., voluntarily not collected by the government) amounts to Rs 5,29,432 crores, i.e., nearly Rs Eight thousand crores more!
These tax concessions, like the bailout packages in the West, are justified on the grounds of providing ‘stimulus’ for economic growth. The reduction of fiscal deficit, thus, has to be borne by the poor through austerity measures. ‘Tighten the belt’, the PM has said. This process has begun with the massive hike in the price of petrol. There appears little concern that this could well lead to a cascading inflationary spiral over and above the already escalating rise in prices. Remember, crores of two-wheelers consume petrol.
Summing up the
discussions on the
budget and moving the Finance Bill for adoption, the finance
minister gave a
stirring call for ‘austerity’ in the face of
bad economic times. The growth rate is declining, the
industrial production, particularly manufacturing, is sharply
rupee is in a tailspin, Air
All developed countries, particularly those in the European Union, imposed severe ‘austerity’ measures on the people to meet the heavy debt incurred for the humongous bailout packages to those very financial corporates, who, in the first place, triggered the current recession. Corporate insolvencies were converted into sovereign insolvencies. Austerity drives were foisted while bankers were receiving billions as bonuses due to State funded bailout packages. Transferring these burdens on to the people led to the angry rejection in the elections and the current crisis threatening the disintegration of the EU.
This idea of
measures has arrived in
A sustainable healthy growth trajectory can be achieved if the sums given as tax concessions are instead collected and used partly for reducing the fiscal deficit and partly for financing public investments. Such investments will permit us to build the much-needed infrastructure while generating substantial additional employment. The consequent rise in aggregate domestic demand as people spend their wages will set in motion a healthy growth cycle. Invest in the people, not just the rich. This UPA government, surviving in the name of the aam admi, must not be allowed to betray the people’s mandate by appeasing international finance capital and India Inc. at the expense of our country and people.
(May 30, 2012)