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Cpi(M) Rejects Govt Explanation For Oil Price Hike


The CPI(M) yesterday said the argument that the government had to incur a lot of subsidies to maintain the present level of prices of petroleum products did not hold good. It criticised the government for mishandling the oil sector to bridge the fiscal deficit.

In its bid to block a hike in prices of petroleum products, the CPI(M) released a paper titled Oil Pool Deficit or Cesspool of Deceit.

The paper, authored by politburo member Sitaram Yechury, argues that there are other ways to bridge the oil pool deficit rather than going in for a hike. A copy of the paper was sent to Prime Minister Inder Kumar Gujral.

Yechury told newsmen that the CPI(M) and other left parties would raise the issue at the United Front steering committee meeting on June 15, and press for an alternative strategy to check the deficit.

He suggested several long and short term measures to curtail the deficit, which included rationalisation of natural gas prices, return of extra revenue earned by the hike in prices in July 1996, tax on luxury cars, diesel vehicles and captive diesel generators used by the industry.

Instead of passing the huge burden onto the people, the government should tax the richer sections and stop milching the oil sector to meet the fiscal deficit, he said.

The annual collection of revenue from the oil sector is in the range of Rs 17,560.80 crore in 1996-97.

Compare this to the addition to the oil pool account deficit which was Rs 9,800 crore in 1996-97.

It is clear that the subsidy amount for diesel and kerosene is far lower than the revenue that the government is collecting from the oil sector, the paper says.

Yechury said if the custom and excise duties were waived on petrolem products there would not be any need to subside them.

In fact, the price of petrol in the United States is lower than the price of diesel in India, he pointed out, explaining that this was due to heavy customs and excise duties on these products in the country.

If the custom duties are not levied, the oil pool deficit would be less by as much. In other words, to augment the finance ministrys revenues, the people have to pay the price, the paper says.

Yechury said the other reason for the burgeoning oil pool deficit account was a sharp fall in the indigenous production. While in 1984-85, the indigenous production was able to meet 70 per cent of its needs, only 50 per cent of all demands are met through this now, he added.

Yechury alleged that the finance ministry was diverting money earmarked for the development of domestic industries to meet the fiscal deficit.

The amount collected till 1997 and to be made available to the Oil Industry Development Board was Rs 28,900 crore. But till 1991-92, only Rs 902 crore was transferred, not a paisa afterwards, he added.

First Published: Tue, June 10 1997. 00:00 IST