Rising resentment

The UPA will face tough questions in Parliament despite diversionary measures like Rahul Gandhi's padayatra'. BY Venkitesh Ramakrishnan in New Delhi

in New Delhi

THE hike imposed by the United Progressive Alliance (UPA) government on the prices of petroleum products in June 2011 was very much in keeping with the politically cynical approach that has characterised the ruling coalition's second innings. It demonstrated once again that the UPA laid greater emphasis on advancing political interests than on the welfare of the people.

The coalition leadership said that the government had no choice because global crude oil prices had increased. However, crude oil prices, which touched $100-115 a barrel in April-May, actually came down to $90-92 a barrel in June. It was not difficult to deduce why prices of petroleum products were not increased in April-May: that was the time when Assembly elections were being held in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry.

According to a number of campaign managers of the Congress in Delhi, party general secretary Rahul Gandhi's kisan padayatra in western Uttar Pradesh, with the professed objective of championing the cause of farmers of the region, was conceived as an initiative to detract public attention from the issues thrown up by the oil price hike, including its impact on inflation, and the opposition campaign on these issues. Two days into the padayatra, a senior Congress leader from the South told Frontline that the tactic had indeed worked: Whatever its final political output, there is little doubt that Rahul Gandhi's padayatra has diverted the attention of large sections of the media, particularly the electronic media, away from the campaign that opposition forces such as the Bharatiya Janata Party [BJP] and the Left were seeking to build up on oil price hike and related issues.

The leader also pointed out that initial responses to the oil price hike, including from political allies of the UPA such as West Bengal Chief Minister Mamata Banerjee, had indicated that an opposition campaign on the issue would accrue significant political mileage. Mamata Banerjee had opposed the hike and asserted that it would make life more difficult for the common people. She had made her objections known to Union Finance Minister Pranab Kumar Mukherjee and followed it up by announcing the West Bengal government's decision to withdraw the cess on LPG, bringing down the price of cooking gas marginally. In the wake of her move, Mukherjee has written to all Chief Ministers to reduce State levies on diesel, kerosene and cooking gas to mitigate the impact of the price hike. Almost all State governments run by the Congress and its allies responded favourably to the Finance Minister's appeal and reduced State levies in varying degrees, the leader said.

The National Democratic Alliance (NDA) led by the BJP and the Left parties have labelled these moves as gimmicks that do not make much of a difference to the people. Prakash Javadekar, BJP spokesman, told Frontline that the hike would bring in a chain reaction that would cause the prices of all essential commodities to go up. This, he said, would be all the more taxing for the people because the UPA government had not done anything to tackle the food inflation and there was no signal that it had any concrete plan for that. All this suggests that the UPA will not be able to escape the people's wrath, whatever the immediate impact of the diversionary gimmicks, Javadekar said.

Dipankar Mukherjee of the Communist Party of India (Marxist), or the CPI(M), felt that the social, political and economic impact of the hike would be longstanding and the government would need to make fundamental changes in its approach to tackle the negative fallout of the move.

What is required is a shift that takes the policy priorities in this sector away from the interests of the dominant corporate lobbies and makes it more nation-oriented and people-oriented, he said. Mukherjee also stated that beyond the larger picture and at a more immediate time frame, the current hike violated the government's own promise about zero duty on petroleum products', he said.

This was the promise that the government made when it deregulated their prices. It has not kept this promise. At a more nuanced level, the government's moves in this sector also point towards efforts to obfuscate facts and hoodwink the people. One of these measures is the tokenism shown in reducing the taxes. The government says that it has withdrawn the import duty of 5 per cent on crude oil. As a matter of fact, the UPA-II government imposed this tax in Union Budget 2010 despite strong opposition, including a cut motion in the Lok Sabha by the opposition parties. It is also notable that the so-called tax adjustments are being made without making any fundamental effort to restructure indirect taxes both at the Centre and at the State level, he said.

Mukherjee pointed out that the Parliamentary Standing Committee on Petroleum and Natural Gas, which included Members of Parliament from all parties, had said that successive governments had a tendency to bank heavily on this sector to mobilise revenues and squeeze it to the maximum with little concern for the common man. The committee stated that this needed to be changed. But then there are no signs of such changes happening, he said.

He added that during 2010-11, the contribution from the petroleum sector to the Central exchequer approximated Rs.1,36,000 crore and to the State exchequers about Rs.80,000 crore. The subsidy provided by the government including the oil bonds issued on the public sector oil- marketing companies during the same period amounted to Rs.40,000 crore. This works out to 20 per cent of the petroleum sector's contribution in taxes and duties. In other words, the common man pays Rs.100 as taxes or duties and gets Rs.20 as so-called subsidy.

As a matter of fact, the contribution of the petroleum sector to the Central revenues alone rose from Rs.46,603 crore in 2001 to Rs.136,026 crore in 2010-11. On the other hand, corporates who are importing crude oil for refining and for exporting the refined products are earning huge profits after getting duty draw back incentives'. Petroleum products worth Rs 1 lakh crore are being exported by private refineries. The problem with the present government is that it is not ready to address all these issues comprehensively and chalk out policies and programmes. And unless that happens, the sufferings that this sector imposes on the common man will continue unmitigated, he said.

According to him, the Left parties have decided to use the monsoon session of Parliament to highlight this larger perspective and the people's resentment. The NDA, too, will make use of the issue to gain some political mileage. Clearly, this will present yet another challenge to, and open yet another battle front for, the UPA, particularly its principal component, the Congress, which is beleaguered by charges of rampant corruption.