No plan to interfere in daily price change of petrol, diesel, says Dharmendra Pradhan

Petrol prices have started falling, decreased in past two days, says Dharmendra Pradhan

New Delhi, September 14: Due to high pressure in order to check the hike i fuel prices from public, especially middle classs Dharmendra Pradhan, the petroleum minister on Wednesday  conducted a high level meeting with the ministry’s officials. According to official sources, after the meeting was concluded, he tried to hard sell the government’s policy to allow daily revision of petroleum products by the oil marketing companies.

Dharmendra Pradhan made three incorrect arguments to exempt his government of the crime of misusing the money of the middle class by keeping high petroleum prices even though the price of crude oil is at very lower price than it was three years ago.

Arguments made by Dharmendra Pradhan

First argument: The hike in the prices was constricting customers. The government also granted permission for the daily price revisioning to guarantee that the public so not have to wait for 15 days in order to enjoy the benefits of a fall in international crude prices.

On the other hand, the shocking reality is that the decision to allow daily price revision of petrol was taken only to assist the government-owned petroleum companies. Before deregulation of petrol and diesel prices in the country, petrol companies used to be price sensitive and did not undertake price hikes on a daily basis.

The main focus of the petroleum companies now is making profit and from June 2017, the prices decreased only in the first 15 days by just 3%. Since 2 July, the prices increased by about 7%.  In addition, all the three government-owned oil marketing companies are functioning as a monopoly just by keeping a marginal difference in their prices. After the hike in prices, the public especially the middle class is the only loser.

Second argument: The higher profit that comes from the products permitted the government to increase social sector spending. But the truth is that according to media reports, on a combined basis,  the tax collections from petrol and diesel increased a massive 111% year-on-year in Financial Year 2016. The current year would not disappoint either.

But accordingly, the social sector has not obtained not even a fraction of the bonus that the government got from higher fuel taxes. According to the reliable sources, Arun Jaitley said in his budget speech made a point to highlight that the MGNREGS (Mahatma Gandhi National rural Employment Guarantee Scheme) obtained its highest share at Rs 48,000 crore. There is 1% increase from the allocation in 2016-17 which included with the supplementary budgets made through the year, stood at Rs 47,499 crore (revised estimate).

But when the matter comes to petrol, the government is only winning and the public is suffering every day. The other social sector schemes also obtained average increases in their budgetary shares ever since the National Democratic Alliance government came to power. But the ultimate reality is that the increased income from the petroleum sector is utilized to cut the monetary deficit, that was against the advice of many economists. In spite of the fall in the growth of the country, the National Democratic Alliance government has been constant on cutting down the fiscal deficit. And as a result, mainly the middle class is paying for the government’s fetish to keep fiscal deficit low.

Third argument:  Dharmendra Pradhan said that Hurricane Harvey and Irma in the United States have a huge impact on the fuel prices due to an increase in the international refinery margins.  The estimates recommended that the prices would be relieved in the upcoming days. While the ultimate truth is that the refinery margins in the international market have increased that resulted in sudden hike in the petroleum prices in India.

In addition, even if the refinery margins reduce to the pre-hurricane level, there would not be much of a difference in the final price of petrol and diesel in India unless the government decides to roll back exorbitant amount of excise duty being charged these products since it came to power.