By Gyan Pathak
Profiteering has become the new nationalism for India, if the two recent orders of the Modi government happen to be any indication. While 800 million people are facing conditions of near starvation, the government has allowed diversion of millions of tons of surplus rice with FCI to be converted to ethanol to be used primarily in bio-fuel, and has increased taxes on petroleum to the highest level in the world. Affordability of the people in precarious conditions due to lockdown does not seem to be the government’s consideration, since they have decided to sell petroleum at exorbitant prices. For example, one litre of petrol in Delhi costs only Rs 18.28 but is sold to consumers at Rs 71.26 and one litre of diesel cost only Rs 18.78 but is sold at Rs 69.39.
Government’s resorting to profiteering is shameless while people were locked in their homes apparently for saving their lives from the dreaded disease called COVID-19. Citizens were made to understand that the government would thus find time to make India’s already ailing health system ready for tackling the pandemic. It did not happen because it was not the priority of our governments. Only that much was done which was considered necessary by our political establishments to show themselves doing whatever was possible for them to do, but in reality were doing petty politics and resorting to profiteering all in the name of nationalism, at a time when 800 million Indians have lost their livelihood with no resources left with them to buy even food, medicine, or masks. It has resulted in ever increasing COVID-19 cases on the one hand, and pennilessness of the people on the other.
Profiteering will break the backbone of the people, but who cares! The government has increased the taxes to 69.3 per cent on petroleum which is highest in the world. The Union government will gain by it an amount close to Rs 1.7 lakh crore in additional revenues this fiscal. The hike on petrol was by Rs 10 per litre and on diesel by Rs 13 per litre. It was done to mop up gains at a time when international oil prices are witnessing steep fall to a two decades low.
The hike that took effect earlier this week was the second hike in excise duty in less than two months, a period that almost coincides with the period of lockdown of the country that has put a full stop on the economic activities of the country rendering millions jobless and penniless. March 14 excise duty hike of Rs 3 per litre each on petrol and diesel had enabled the government to gain as much as 39,000 crore. Thus the government stands to gain as much as over Rs 2 lakh crore at 2019-20 level of consumption. If lock down continues that level of consumption cannot be achieved, but common people will suffer on account of their unaffordability.
Government of India’s increase in petrol and diesel taxes by $21 per barrel and $ 27 per barrel respectively will result in the government’s tax collection increasing by about $21 billion if the tax hike is maintained for the full year.
It is also worth mentioning that the government had raised excise duty between November 2014 and January 2016 on petrol and diesel on nine occasions and earned astronomic amounts in profit because of plummeting global oil prices. In those 15 months the government increased its earnings from 99,000 crore in 2014-15 to Rs 2.42 lakh crore in 2016-17. Since 2014, duties on petrol and diesel have been increased 12 times. A reduction has occurred only twice.
Following the order of fresh hike on Tuesday, the excise duty on petrol has gone up to Rs 32.98 per litre, while on diesel it is Rs 31.83 per litre. This represents a 248 percent increase in duty on petrol since April 2014 and a 794 percent increase in diesel. The increase in VAT during the same period is to the tune of 54 percent for petrol and over 184 percent for diesel.
The Indian basket of crude oil price has crashed over 64 percent this year from $65.5 per barrel in December 2019 to just $23.38 per barrel on Monday. Last month, it had touched a low of $19.9 per barrel. Retail prices however did not come down commensurate to this decrease and remained steady at Rs 69.87 per litre for petrol and Rs 62.58 per litre for diesel in Delhi for the whole of last month.
By mid-May India’s strategic storage capacity of 5.3 million metric tons will be full. Apart from that our oil companies have 7 million metric tons of floating oil in their contracts. We have booked them. We have purchased them. Apart from that, with our domestic online capacity in crude oil or products we have storage of around 25 million metric tons. Put together we have nearly 38 million metric tons of product and crude oil storage facilities. This is around 18 percent of our annual requirement of energy. This is the maximum capacity we could hold and we are holding that. However, the question is, can the government not allow the benefits to the common people?
The Government is trying its best to make people believe that it is an extraordinary time, and that they need money to tackle the corona crisis. They are right in claiming that but wrong in resorting to profiteering under such logic. It is what the Modi government has been doing since 2014, and all the profits were squandered. By the end of 2019, India’s economic growth declined to one decade low and joblessness at 45 year high. Deterioration continued under Modi. Few profited by it and most suffered. Corona outbreak and subsequent lockdown has worsened the condition. Modi, his colleagues in the government, and his fan club needs introspection and come out with a fresh approach to the crisis before the situation gets out of their control. (IPA Service)