Thursday 04 Mar 2021

Stop the blame game on fuel price rise

| FEBRUARY 21, 2021, 11:05 PM IST

Fuel prices continue the upward march hitting record highs and hovering around the Rs 100 per litre mark, even as the Central government remained helpless. Petrol prices rose for the 12th consecutive day, and in a bizarre twist, Prime Minister Narendra Modi blamed the erstwhile UPA government for the current crisis, saying Congress did nothing to reduce India's energy import dependence on other countries.

On Saturday, Finance Minister Nirmala Sitharaman said the steep rise in petrol prices is a vexatious issue for which there is no answer, and except for reducing the prices, nothing would be convincing to the people of the country. She labelled it as a 'dharma sankat' situation and opined that the Centre and States need to figure a way out to ease the price pain on consumers.

Modi's argument to push the blame on the UPA government for the current fuel crisis is not justified against the backdrop of the very little his government has achieved in tapping into alternative sources of energy for over six years. The prices of fuel continued to rise across the international markets and it was only in recent times a sense of awakening has dawned.

The crux of the issue is on taxation that adds to the base price of fuel, including the excise duty imposed per litre by the Central government and the VAT charged by State governments. The Central government alone rakes in over Rs 3 lakh crore from excise duties on petrol and diesel. The hesitancy of the government to cut taxes is obvious. It doesn't want to lose revenue after the pandemic has forced a slide in income tax, GST collection and custom duties. On the contrary, Sitharaman in her recent budget levied an agriculture infrastructure and development cess of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel.

States like Goa, which sympathised with its citizens by cutting VAT can no longer afford to do so with revenues dropping significantly during the financial year 2020-21. It may be recalled that the BJP-led government in Goa had slashed VAT on petrol in 2016 from 15 per cent to 9 per cent. Those were the good times and Goa was heading into the 2017 assembly elections. Cut to the present, and the State government now charges 27 per cent VAT on petrol and 23 per cent VAT on diesel.

The rising fuel prices will have a cascading effect across vast sections of people and will hit the common man the most. Public transportation, consumer-oriented companies and farm products will see a spurt in prices triggering inflation. Consumption levels will drop further and the much-talked-about economic recovery could be delayed.

It’s time to stop the blame game and focus on the present. Modi's mission of 'aatmanirbhar' must focus on energy generation. Urgent steps need to be taken with a focus on raising the share of natural gas and diversifying clean energy resources. The ‘go electric’ campaign is a step in the right direction and the Centre must step on the gas.

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