The Hindu Business Line : Oil price: States should take the initiative

States have to take some step or the other to reduce sales tax and other cess imposed on petro-products, which will have the effect of reducing the burden on the average citizen.

A RALLY against the hike in petro and diesel prices in Kolkata... The States must also perhaps go the extra mile to reduce the burden on the consumer.

The latest move by the Congress to get States governed by it to reduce the sales tax on petroleum products has injected a whole new dimension into the oil price politics currently gripping the nation with the emphasis now shifting to actually doing something to help the average citizen at the individual political-party level rather than just airing demands.

Hitherto, the debate has progressed on entirely predictable lines — of opposing price increases on ideological and other grounds, the thrust being on protection of the basic interests of the common man. In this scenario, whoever increases petro-product prices (mainly that of petrol, diesel, kerosene and cooking gas) has been dubbed as anti-people, the thrust of the argument being that the Centre has enough scope to bear the reduction in revenue from imposts on the oil sector (excise and Customs duties) which would invariably lead to a reduction in the extent of the price increase (dictated by extraneous determinants), thus helping the average citizen.

Turning tables

Curiously, no matter which Government has been in power — the NDA or the UPA — criticism has always been levelled against the policy-maker and implementer, resulting in a situation where specific political parties have found themselves on either side of the fence at different points in time. Thus, the BJP has not hesitated to take up the onerous responsibility of bearing the cudgel of protest now when the Congress-led UPA Government, in its wisdom, has decided to increase petrol and diesel prices when, during its days at the helm of the NDA regime of Mr A. B. Vajpayee, the party (the BJP) found itself on the other side of the divide, having to face the stick from the Congress Party and others for doing exactly the same thing which it is now protesting against.

Practising politicians of whatever creed and ideological persuasion must always remain on the right side of the `people' because it is the latter on whom their future rests vis-à-vis political power. So even if there are enough reasons why the government of the day cannot but raise petro-product prices, the knee-jerk reaction is to oppose it because of the political calculation that such a stand would yield an immediate populist dividend, both real and imaginary.

Needless to say, to a politician operating in Indian conditions where poverty rules the roost, this is a sensible course to adopt even if he or she knows that one would have to do exactly the same thing (in this case raise petro-product prices) if one were occupying the seat of power.

Power-oil price link

The importance of the Congress Party decision to get governments run by it in different States to provide succour to citizens by reducing local imposts on petro-products lies in the crucial fact that it aims at severing the link between opposition to oil price increases and not being in power. The central fact is that the opposition parties at the Centre (which include the Left on the oil-price increase issue) are in the seat of power in some States where local imposts have further exacerbated the problems faced by citizens following the oil price increase.

Clearly, if the Congress can set the example of reducing revenue accretion in the States ruled by it (to start with Maharashtra), thus helping the average citizen, the parties opposing the UPA Government decision to raise oil prices must take the political step of doing something along the same lines in the States where they are in power.

If they cannot do so, at the very least they will lose the moral right to point a finger at the UPA regime, especially when the people are going to ask them about what they have done on their part to reduce the burden of the price increase in States ruled by them before pulling up the Centre?

In States where the finances are a mess, the point will be made (as, in fact, they have already been made) that, given the crisis situation, there is no alternative but to garner additional resources from the Centre-imposed oil price increases. Fair enough, but then the Centre itself (no matter which party or coalition is in power) has always employed the same general argument, stating that, beyond a point, a price increase is inevitable if the oil marketing companies are to be saved from financial ruin.

`Many other ways'

The usual riposte to this line of defence has been that there are many ways in which the Centre can meet the crude price increase without raising the burden on the common man, who is already in a spot in trying to make both ends meet. This may or may not be a reasonable stand to adopt, but the central fact remains that if the Opposition parties do not hesitate to make such a demand on the Centre, they should be prepared to accept a similar demand made by the Centre — and, maybe, a section of the people at large.

It is of no use arguing that the nature of the problem facing the States is different compared to that of the Centre and that, therefore, what the Centre can do the States cannot. At the end of it all it is a matter of efficiency, and the States cannot pass on the responsibility for not being able to match normal efficiency expectations to the Centre, basing their defence either on ideological grounds or on Constitutional infirmities springing from the federal character of the Union.

As far as one can make out, there is now only one path before the Opposition and Left-ruled States — to take some step or the other to reduce sales tax and other cess imposed on petro-product prices, which will have the effect of reducing the burden on the average citizen. Indeed, if the general cost of living is affected much more by an increase in the price of diesel compared to the petrol price, then the least the States can do is to devise methods by which the diesel price rise will be moderated leaving petrol virtually untouched.

Indeed, even as regards kerosene and cooking gas, this is the opportunity for some States to go the extra mile by reducing imposts, which would, among other things, add mileage to their political posturing vis-a-vis the Centre on the oil price-increase issue.

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