Business Standard / New Delhi Mar 03, 2010, 00:18 IST
After the bad mauling of the 2009 Lok Sabha elections, India’s major opposition political parties have been desperately seeking a revival of fortunes. The leader of the opposition National Democratic Alliance (NDA), the Bharatiya Janata Party (BJP), has put in place a new leadership that is eager to make its mark. So desperate is the Left Front, which faces the prospect of defeat in West Bengal and Kerala, that after nearly two decades of isolating the BJP, it has finally rediscovered its old “all-in-one unity” plank to join hands with all opposition political parties in the protests launched against the Union finance minister’s Budget proposal to bring back the earlier higher duties levied on petrol and diesel. The opposition alliance has received a shot in the arm from expressions of solidarity on the part of some of the constituents of the ruling United Progressive Alliance (UPA). Given all this political activity, the ruling Congress party should see that any rollback of budgetary announcements will be seen as a huge victory for the Opposition and would serve to weaken the ruling coalition. With no important election around the corner, the Congress party would gain little from succumbing to this obvious political gamesmanship of the opposition parties. Of course, the Congress party itself is guilty of demanding a rollback of similar budgetary announcements in the past. Indeed, BJP Finance Minister Yashwant Sinha earned the sobriquet of “Rollback Sinha”, thanks to the insistence of the Congress party and the Left on the issue of fertiliser and oil prices.
It remains to be seen if the Congress party will stand by the finance minister and the prime minister, who has categorically ruled out any rollback, or will yield to populist pressure from within its own ranks. It is at moments like this that party general secretary Rahul Gandhi must speak up and offer a different kind of forward-looking leadership to his party rather than allow the views of the party’s populist dinosaurs to prevail. What the Congress party and its allies must understand is that the finance minister has taken only the first step in the direction of correcting distortions in energy pricing. As a net importer of oil, India cannot afford the luxury of subsidies that are unrelated to costs and global prices. The rollback being demanded is of the duties levied by the finance minister. As Mr Pranab Mukherjee has clearly articulated, he has only brought back a duty that had been reduced when international oil prices were ruling at much higher levels. The next step in energy pricing is, in fact, to implement the recommendations of the Kirit Parikh committee, which has called for a return to market-based pricing of energy. This is exactly what the NDA government used to do till a few months before the general elections of 2004. It does not make any political sense for the UPA to ignore basic economics in energy pricing in a year when politics need not be the primary driver of policy. How the government responds will be a measure of the resilience of the UPA to pressures from within and without.
There is hue and cry on the price rise of petroleum products.There is heavy deficit in oil pool account.As it appears the oil companies are not running on commercial lines.Government is getting its due share of taxes and excise duties,but the producing companies are running on losses. At the same it has become an item of mass consumption,and any increase its price is resulting in inflationary pressures.
As a prudent rule, there should be clear cut policy of either increasing or reducing the prices.As a first step it should be decided that the pricing should be on basis "cost" and not "cost plus"formula.Each time the weighted average cost of the existing quantity should be calculated and rate fixed depending the yielding of the products.It should not just be a political decision depending on pressures alone.It should be a policy decision.
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