For the last week, the fuel price hike has been a keenly debated issue. There have been reports of the Oil Companies incurring daily losses to the tune of Rs.600 crores and that if they were not aided soon, they would become bankrupt in some months as they would have no cash to buy petroleum.
I agree that the duties and the taxes imposed on petroleum products are too high at about 52%(including excise and sales tax) but it is not that the rates in India are the highest in the world. Places like Turkey and Norway sell petrol at about Rs112/liter.
According to me a vehicle is a luxury and not a necessity. So, if a person is able to afford a vehicle, that person should be ready to bear the expenses to run his vehicle i.e. the fuel costs. So, I feel there should be no subsidy in fuel prices for the private vehicle owners.
But for that to take place, the government needs to strengthen the public transport system and provide the country with world class facilities. People who are willing to let go of their personal vehicles for public transport should feel the worth for it just like in the case of Delhi metro. The fuel subsidies should only lie for the public transport vehicles and the commercial goods carrying vehicles(because the goods transfer affects the prices of all the commodities and indirectly the inflation).
This would help the country on many levels. First, the traffic on the clogged roads of the cities in India would go down. The public transport system which is in shambles in most cities would be strengthened. Things like car-pooling and use of public transport which has been advised by the traffic police for generations would pick-up. The private vehicles operating as taxis would need to get an official taxi number plate to be able to run viably. The reduced number of vehicles on the road and the much improved public transport system would also help in curbing pollution and also help the global warming situation.
Another aspect is the subsidies on cooking gas. Most of the poor people do not use LPG cooking gas. They rely more on kerosene. So, here too I feel that there should be no subsidy in the LPG prices and the kerosene prices need to remain subsidized so that the economically backward sections of people are not affected.
I feel that the demanding in a cut in sales tax and excise duties would not be a very fruitful experience for a country like India where the government revenues depend a lot on the fuel sales. If India has to keep up the fast growth it has achieved over the past decade, it requires all the revenues for the various projects so that the growth can be sustained. Therefore, I am not in favor of such moves.
I know that most of the people especially those from the middle class to which I belong too would not agree with my view. They would again think that it is the middle class which has to suffer again. But I still stand by my views because I feel that it is the cream which is taking all the benefits of the subsidies and not the people who really require it.
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4 comments:
hmm....out of the box thinking :)
Well I agree with your perspective up to certain extent, but not completely :)
I don’t feel our transport system is so strong that we should say vehicle to be a form of luxury at least in current scenario….. If we take a case of Bangalore itself, none of the autos will be ready to go for 2-3 KM distance, and somehow if you get anyone, he will charge at least Rs 40-50 only (Of course this money will be even higher in case its raining or some other situation where auto’s value is much more). Coming to our city bus service, normally each bus covers its route with 2-3 times of normal number of passengers. Though still I am in favor of removal of subsidy from petrol because that will definitely promote vehicle sharing and such reducing the traffic on roads.
Secondly, before removing the subsidy, first the government should heavily cut the allowances that our ministers get. Our ministers are entitled for probably around 500 liters of petrol per month other than the train (entitled for AC-first) and air travel allowances. I remember of reading an article, few years back, which mentioned that government had to pay only few hundred crores of rupees for the travelling of the family members of our former PM’s and CM’s families and the best part was their families had around 19-20 members, and just not the real relatives, it included relatives even up to the relatives of in laws of their children :)
All this money comes from the taxes that we pay :)
If subsidy is removed then it should be removed totally, otherwise black marketing of fuel will increase even more since the employees of public transport etc. will also join the group to make “extra income”
I don’t have any problem, if the money collected by reducing the subsidy goes for the development of the country or to support the economically weak sector, but it really pains when I see that our hard earned money goes in the pockets of our politicians and those who have their support.
I understand your concern and agree that the subsidy is not at all a long-term solution. But removal of subsidy has to done gradually. With inflation inching towards the 8.5% mark, it would not be wise decision to put additional burden on lower and middle class who are already bearing the brunt. I think govt. was too late to react but it is always easier to criticise in retrospect.
Comparing countries like Norway and Turkey to India wouldn't give you a clear picture as the cost of living in these countries is quite high and remuneration is commensurate with such high petrol prices. There are countries like Oman where people are highly paid but pay only Rs 8 for every litre of petrol they burn. So, it's better to see whether an average Indian, with the kind of salary he/she gets, will be able to accommodate this price hike in his/her monthly budget without any hassle.
i appreciate the way you thought..........but i think that vehicles ve become a nescessity rather than jus bein a luxury....
The infrastructure has to be worked upon and on a reely large scale but we have a limited budget fo that....the connectivity of remote areas is very bad so u need to have a two wheeler if not a four wheeler of ur own..........
to develop such kinda infrastructure we have to wait fo quite long... but till that period the extreme hike of 5/- is tooo much n its unaffordable by the middle class in the recession period with inflation predicted to go as high as 10%!!!
so y not compare india wid pak which has fuel prices as low as 17/- rather than comparing it to turkey!!!
its a very popular misconception about the fuel prices in Pakistan and the US, the figures people know are pretty old. Currently the prices in both US and Pakistan hovers around 50-55
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