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Mainstream, Vol XLVI, No 25

Heavy Blow to Aam Aadmi

Editorial

Sunday 8 June 2008, by SC

As if the hefty rise in prices of essential commodities keeping pace with the mounting inflation was not enough, the UPA Government has announced a steep hike in the prices of petrol, diesel and LPG even though the poor man’s lighting and cooking fuel, kerosene, has been left untouched. These constitute the highest-ever increases in the country’s oil industry—the rise in petrol being Rs 5 a litre, in diesel Rs 3 a litre and the LPG Rs 50 a cylinder. The PM, in his unusual address to the nation on the issue, has tried to explain that given the gravity of the situation—the sharp escalation in the global oil prices and the losses being continually incurred by the oil marketing companies—such a hike was “inevitable” while claiming that what the government has imposed was a “moderate” burden on the public. True, if one takes into consideration the Petroleum Ministry’s initial suggestion—a Rs 10 hike on petrol and Rs 5 on diesel—what has been decided is far less; also the under-recoveries were estimated—before this revision of prices—to grow to Rs 245,305 crores, and what has been announced will yield merely an additional Rs 21,153 crores that is nowhere near what was required—hence cuts in excise and customs duties have been proposed (that would lead to the exchequer losing Rs 22,660 crores) and oil bonds worth Rs 94,600 crores are being issued to help compensate the oil companies for selling fuel much below the cost. Yet despite all these arguments the fact remains that whatever price adjustment has been declared will result in a severe blow to the common man already reeling under the huge impact of steadily rising prices that show no signs of any decline.

As was to have been expected, the Opposition parties have promptly greeted the government’s decision with vociferous protests across the country. The BJP has called it the UPA’s way of unleashing “economic terrorism” that could engender a popular “upheaval”. Rhetoric apart, such a reaction does convey a measure of public anger over the decision. The Left parties have also vigorously opposed the government’s step and dawn-to-dusk strikes have been spontaneously organised in the Left-ruled States of West Bengal and Kerala; the West Bengal Government has slashed sales tax on petrol from 25 to 20 per cent and on diesel from 17 to 12.5 per cent to provide some “relief” to the consumer. The Kerala and Tripura governments are also due to take similar measures to neutralise to some extent the impact of the hike on the public at large. The Central Government too has urged all States to adopt the same path while announcing its own “austerity measures”.

The Left parties, in their statement on the subject, have pointed out that

In the background of the failure of the government to tackle the rising rate of inflation, this hike in petroleum prices will further aggravate the inflationary situation.

At the same time they have unambiguously expressed their displeasure over the fact that the government had contemptuously dismissed their proposal to impose a windfall profit tax on the oil and gas extracting companies as well as the private oil refineries, before warning:

The spectacle of these companies reaping huge profits while the common people are burdened with huge price increases will not be lost on the people.

The strength of the Left parties’ criticism in this specific matter cannot be ignored precisely because they are highlighting the plight of the common man, the aam aadmi, while pointing to the fallacy of letting the profiteers continue their ‘business-as-usual’ approach in a period of economic emergency—a fresh testimony to the UPA’s double-standards that have evoked protests from some constituents of the ruling coalition itself.
It does not require an astute analyst to conclude that the political fallout of this move would be disastrous in the election year. And in this setting the UPA’s claim to be the standard-bearer of the aam aadmi’s interests sounds increasingly hollow, to say the least.

June 5 S.C.

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