Mamata, DMK oppose rise, but won't press it

Finance Minister Pranab Mukherjee’s efforts to reason with United Progressive Alliance (UPA) ally Trinamool Congress’ chief (and fellow minister) Mamata Banerjee on the oil price decontrol failed today.

Although the government introduced a far-reaching economic reform, Banerjee reacted to the immediate effect this would have, of raising petroleum and cooking gas prices, and said she could not support it in the present circumstances. After the Empowered Group of Ministers (EGoM) headed by Mukherjee met today to approve a market-driven increase in petrol prices, Petroleum Minister Murli Deora said, “The price hike was minimal...we didn’t have a choice.” He emphasised that all UPA allies were on board on the decision.

But Banerjee, who has stayed away from the last two meetings of the EGoM, said she did not attend as her voice would have been in a minority there. “We have raised our voice before the government to reconsider it...It’s not fair to burden the common man,” she said.

Nationalist Congress Party (NCP) chief Sharad Pawar had stayed away from the last EGoM meeting on account of indisposition. He attended today’s meeting.

The Dravida Munnetra Kazhagam (DMK) is another ally opposed to the rise and Minister M K Alagiri had handed over a note at the EGoM meeting that said the decision would put an additional burden on the public, as the proposed increase was very high. The note also said, “LPG is used by a large number of lower middle class families and they have already been affected by inflation. Therefore, any further increase will hit their purchasing power adversely.”

However, both Banerjee and the DMK have indicated that while they would protest at the common man being burdened, they do not intend to jeopardise their position in the Congress-led UPA.

Predictably, the opposition was furious at the rise and has planned rallies and demonstrations to force the government to roll it back. “We demand an immediate roll back of today’s decision. The government has made a mockery of the people’s trust after winning the elections,” BJP spokesperson Prakash Javadekar told reporters here.

“The BJP condemns this decision. People are reeling under the cumulative effect of price rise. This government looks to be aiming at finishing the common man,” he added.

Four Left parties – Communist Party of India (Marxist), Communist Party of India, All India Forward Bloc and Revolutionary Socialist Party – said the rise would compound the problems of those suffering from 17 per cent food inflation.

“India has the dubious distinction of having the highest rate of consumer price inflation in the world,” the Left Front said. The Left parties said prices had been raised just three months earlier. “International oil prices have not risen substantially in this period. Neither is the government prepared to rationalise the taxation structure on petroleum products, which is adding to the price of petrol and diesel in a large measure,” the parties said.

They also said it was a myth that the move would protect public sector companies from underrecoveries. “The so-called underrecoveries are entirely based on notional prices, calculated without any reference to the actual cost of production. In fact, the deregulation is only to help private companies who withdrew from the market because of the government price controls. Now they will be free to enter the market to make profits,” they said.