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| Petro price hike may inflate inflation | | | When in January 2009 the Government reduced the prices of petrol by Rs five a litre, diesel by Rs two a litre and that of the cooking gas by Rs.50 even those delighted by the cut had treated it as a pre-election sop. Well people, to be precise the voters, responded the Government gesture by voting the Congress led coalition back to power. After the Congress led coalition assumed power for the second term people had expected that the team headed by an economist like Manmohan Singh would take measures which would bring down the level of inflation. But within 42 days of the formation of the Government the prices of petrol were raised by Rs. four per litre and that of diesel by Rs. two per litre. For the time being Kerosene oil and the cooking gas have not been touched. Once the Government escaped unhurt by the price rise it may not hesitate hiking the prices of cooking gas and diesel. The concession in petrol and diesel remained in force for five months. The Government has argued that since crude prices in the international market experienced a jump of Rs.38 dollar per barrel, hiking petrol prices had become imperative. The crude prices at present are 70 dollars per barrel against 32 dollars five months ago. Well the Government has a valid argument when it justifies the hike. It says that the oil corporations continued to suffer losses and the Government had to bear the financial burden on making available cooking gas on subsidised rates to the people. The Government has to bear Rs.30,000 crores which it spends on the subsidy on the cooking gas. Let us give the benefit of doubt to the Government as far as hiking the petrol and diesel prices are concerned. But the way prices of series of consumer items have been allowed to inflate during the last five months may not be pardoned by the majority of people who continue to suffer from the steep inflation. Prices of pulses have increased by five to 10 per cent during the last six months. There has been increase in prices of sugar, rice, wheat Atta, edible oil, fruits, vegetables and other consumer items. The Government’s intermittent announcement regarding zero inflation and rise in growth rate seem to be a joke..Without any justification the prices of medicines, including life saving drugs, have registered 10 to 25 per cent hiked during the last one year. Now that the prices of petrol and diesel have been increased it will definitely alter the price structure of various other commodities on account of increase in the freight and transportation charges. Since the central Government needs large sums of money for carrying out various development activities and for meeting the growing demands of the states people may have to bear another shock when the Government may opt for fresh taxes on different commodities and services. There is already economic meltdown at the global level which has not spared India and as such it would be very difficult for the people to bear the burden of additional taxes. Instead of imposing fresh taxes let the Government opt for austerity measures
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