THE UPA government has just completed two years in power. If anybody was expecting a commemorative gift from the government on this occasion, the government has not refused to oblige. The people of India have been duly blessed with yet another hike in the prices of petrol and diesel. Petrol prices have gone up by Rs. 4 a litre and diesel by Rs. 2. This increase has come at a time when prices of almost all food components are also on the rise in the open market. The rise in fuel prices and, consequently in fright charges, will further reinforce this inflationary trend and make household budgets go haywire. To make matters worse for the poor, the government has also proposed a rise in prices as well as reduction in quantum of food items supplied through the shrinking public distribution system.
If the sharp and continuing decline in Sensex has rung the alarm bell for small investors, including large sections of the middle classes, the fate of whose hard-earned savings and pensions is increasingly linked to the share market, the concerted hike in prices of essential commodities signifies a veritable state-sponsored economic assault on the very existence of the aam aadmi. True to the market mantra of ‘buy one, get one free', the UPA has however chosen to combine this economic assault with some free political entertainment. While the government is pushing prices up, the demand for rollback is being raised not only by the rightwing opposition, or the Left friends and supporters of the government, but also by parties that are running the governmental show.
During the NDA years we saw some Sangh outfits try and play an oppositional card against certain policies of the NDA government. Over the last two years, we have seen the Left supporters of the UPA voicing occasional opposition to some of the UPA's policies. Now the Congress has begun perfecting this art in the form of Sonia Gandhi cautioning the government against the likely impact of some of its steps like Manmohan Singh's move to sign free trade agreements with some ASEAN countries. On the petro-price front, while there is a growing demand for reduction in excise duties on prices of petrol and diesel to compensate for the latest rise, the Congress has begun pressurising state governments to reduce the sales tax. Some Congress-led governments have already announced partial cutbacks in sales tax.
It is true that taxes account for a huge part of the price that the consumer has to pay for buying petrol and diesel. Without taxes, prices could nearly be half of what they are now. Local taxes too play a significant role in determining the actual price that the consumer has to pay. One litre of diesel for example costs seven rupees more in Mumbai than in Delhi . The demand for rationalisation and reduction of these taxes to reduce the price burden on the consumer is therefore quite pertinent. Such a rationalisation should involve a reduction of excise duty as well as sales tax, and both central and state governments must be forced to do their bits in this regard.
Rationalisation of oil-related taxes however involves much more than a reduction in excise duties and sales taxes. We must differentiate among various classes and categories of oil consumers. Oil consumed by public transport systems and for meeting the energy requirements of agriculture must be treated separately from the oil consumed by the urban elite and affluent sections with a higher capacity to pay. Of late, there has been a massive expansion of the corporate, bureaucratic and elitist fleet of luxury vehicles. If we have to import more oil to meet the consumption requirement of these sections, the burden must be fixed squarely on such rich and reckless consumers and not transferred to the urban and rural poor who are currently being forced to bear the biggest brunt of price hikes. The tax structure must be redesigned and reoriented in favour of public transport and mass consumption and heavier duties must be imposed on luxury private transport and travel facilities. The UPA's latest budget has, by contrast, cheapened foreign cars.
Currently, we depend a lot on imports to meet our oil requirement. What is the government doing to increase oil production within the country? The policies of liberalisation and privatisation have provided private players like the Ambanis with a bigger control over India 's oil economy. In some cases, foreign companies with no proven expertise are also being preferred to the public sector ONGC or Hindustan Petroleum. This policy direction is detrimental to the interests and development of our oil economy and it must be reversed to lay the emphasis back on exploration and development of new domestic sources of oil. There is also the overall question of our entire energy economy – the question of developing other sources of energy and attainment of self-reliance on the energy front. The UPA government is increasingly subordinating this crucial question to its framework of strategic partnership with the US and this is jeopardising India 's independence and vital interests in this crucial sphere.
Behind the current spurt in oil prices and volatility in the international oil economy lies the US war of invasion and occupation of Iraq . The war on Iraq is again only a part of a larger oil war, a relentless and vicious imperialist campaign for establishing American control over the global oil and energy economy. After Afghanistan and Iraq , the US policy has already turned against countries like Iran and Venezuela . Instead of opposing this oil war and strengthening India 's ties of cooperation with oil-producing countries facing the US-led assault, the UPA government has adopted a policy of closer collaboration with the US . India 's domestic energy preferences are also being openly dictated by the US . There is now a greater dependence than ever before on nuclear imports from the US . India is also under pressure to abandon the Iran-Pakistan gas pipeline for a US-controlled ‘alternative' pipeline involving Turkmenistan , Afganistan , Pakistan and India . The UPA's pro-US policies are thus clearly making India increasingly vulnerable to American global designs and the US-inspired instability and volatility in the international oil and energy.
We must therefore demand a rollback not just of the latest hikes in petrol and diesel prices but of the entire policy package which is ruining our lives and livelihood, our energy economy and other vital national interests.