‘As a layman, I am all for decreasing fuel prices’

Sir,

This has reference to Bhamy Shenoy’s article titled ‘Dramatic drop in petrol and diesel prices: Who are the real beneficiaries’ in Star of Mysore dated Nov. 9.

 Shenoy is NOT in favour of decreasing the prices and is of the opinion that the revenues from the taxes levied on petrol and diesel goes towards welfare programmes by the Government. He has further admitted that he is probably the only person who is advocating this. In this case, I think so too !

To begin with,  my response to Shenoy’s views is as a layman and not as an economist or an expert on oil and energy. I strongly feel that the tax on petrol and diesel is not justified for the following reasons and based on information available in public domain:

1. NDA came to power during 2014. At that time the percentage of population in the country below the poverty line (BPL) was 6.9 percent.  Since 2014 to 2019, the petrol and diesel prices increased by 40 percent and 56 percent respectively.

In July 2021, nearly 60 percent of the price of petrol were taxes. In spite of the increased revenues since 2014, the percentage of population below poverty line declined by just 0.02 percent.  Where were the  revenues estimated at Rs. 1 lakh crore spent ?

 Unlike during UPA Government when the crude oil prices increased by 222% (from 34 dollars to 110 dollars), the price of crude oil during UPA Government dropped by 28% (109 to 78.85 dollars). 

2. Germany-based Transparency International ranked India 85th out of 175 countries surveyed as the most corrupt. During 2020 it dropped further to 86th place. Does this not give rise to a trust deficit ?

3. According to the World Bank Survey, India ranked 63 out of 190 nations for ease of doing business. Our ranking continues at 63 even during 2020.

4. Has the additional taxes and increased revenues improved standards of education in the country? The condition of Government Schools in rural India is pathetic. The very teachers who teach in these Schools do not admit their own children to these Schools.  Why ?

5.  Shenoy is of the opinion that those affected by the increase in fuel prices are the rich and middle class who own vehicles and can afford the increase. What about those who use public transport system ? Public transport also uses the same fuel.  They too will increase the fares and won’t the poor too suffer ?  

6. Instead of increasing the price of petrol and diesel, increase the taxes, duties  on conventional cars which the rich use.  This targets the rich  and not the poor like petrol and diesel does.

Incentives on Electric Vehicles (EVs) will also help transition from petrol to EVs and in  turn reduce demand on petrol and diesel.

7. Will not the prices of all commodities like rice, onions, potatoes, wheat, dal etc., which the poor people too use, go up due to increased transport costs ?   

8. Barring the corrupt and unscrupulous who amass money through illegal means and who cheat banks, all people who become rich do so by hard work. They pay the taxes due to the Government.  Will not the money they spend go back into the economy ?

Personally, I am all for increased revenues to the Government provided we know where the monies are being spent. It should finally translate into improved quality of life of the poor and the needy. I would further advocate savings and cutting down on wasteful expenditures of the Government.

Therefore, Shenoy and I should rather focus on greater transparency and accountability of the Government than debating over fuel prices. Lest we miss the wood for the trees.

– Ashvini Ranjan, Jayalakshmipuram, 11.11.2021

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