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Petroleum prices: Robbing Peter to pay Paul

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By Sidharth Mishra

The political parties of every hue in our country have great belief in what Irish dramatist George Bernard Shaw had said. The creator of classics like  Man and Superman, Pygmalion and Saint Joan, Shaw exercised great influence over western theatre, culture and politics during his lifetime and thereafter. He once observed, “A government which robs Peter to pay Paul can always count on Paul’s support.” Shaw’s comment was inspired by the Biblical saying, “to unclothe Peter to clothe Paul.”

Last week on getting the diesel tank of my vehicle filled, I was rattled as the fuel pump helper raised a bill of Rs 3600. In 2013-14, when the Achche Din (good days as promised by challenger to the throne Narendra Modi) were still to dawn, the tank of a similar vehicle would get filled for Rs 2200. Thanks to the lockdown, as the need for filling the fuel tank arose after quite a while but the price of diesel came to actually pinch.

It pinched harder when one learned that the average price of Indian crude oil basket between 2014-15 and 2020-21 has dropped by almost half — from $84.16/bbl to $44.82/bbl. The average price of Indian crude oil basket was lowest in 2020-21 since 2005-06, but the central excise duty on petrol and the tax collected by the centre has increased by more than three times since 2014-15.

Excise duty on petrol in 2014 was Rs 9.48 per litre, currently it stands at Rs 32.9 per litre — an increase of nearly 3.5 times. Similarly, excise collected on petrol was Rs 29,279 crore in 2014-15, which has increased to over three times to about one lakh crore for the year 2020-21.

However, despite the huge central excise duty being paid still the cost of petrol and diesel would not have crossed the century mark in Delhi. The century mark was breached because the state government too has kept pace with the centre in taxing people. For Rs 32.9 charged by the central government for each litre of petrol, the ‘people friendly’ Kejriwal government in Delhi was charging Rs 23.43 as value added tax (VAT). 

Centre has indicated that there was no plan to cut excise duty as higher expenses were being incurred during the Covid-19 pandemic, especially as expenditure has increased due to free vaccinations and other welfare schemes. Mr Kejriwal on his side has had no qualm on blaming the centre alone for the fuel prices.

During a recent visit to Uttarakhand, he said, “Oil prices at international level are decreasing but our central government is increasing tax, which is not right.” He kept quiet on what he was taxing and has neither given any assurances on bringing down VAT.

At the bottom of problem is the competitive politics of subsidy between the different political parties. This is best showcased in the advertisement blitzkrieg unleashed across the capital by Yogi Adityanath Government of Uttar Pradesh and Arvind Kejriwal government of Delhi, both claiming presenting a bouquet of ‘muft’ (free) schemes to the people.

From free testing to vaccination and treatment of the Covid infected patients by Yogi government is understandable but distribution of free ration defies logic unless it’s a way to entice poor voters during the upcoming elections. Kejriwal too makes no bones about buying votes by investing in subsidies.

He has been recently on a campaign trail in the states of Goa, Punjab and Uttarakhand, and in all the three states he has promised ‘Delhi model’ of giving free 300 units of electricity. He could have also mentioned that the ‘Delhi model’ comes with the package of a debilitated health infrastructure, which saw death raging across the city affecting many a family during the second wave of the Covid 19 virus.

How correct is it to tax people so heavily to invest in electoral gains? There should be a mechanism of accountability of the governments towards the honest tax-payers. But then that’s a very far, far cry as another English short-story writer, poet, and novelist Rudyard Kipling had put it, “only out of the savings of the thrifty can be made the wage-fund to set other men on the way to be prosperous.” How ironic are the achche din!

(The writer is an author and President, Centre for Reforms, Development & Justice) 

 

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