Planning Commission Deputy Chairman Montek Singh Ahluwalia has charged Left parties with deliberately misleading the public on pricing of petroleum fuels and said there was no alternative but to hike prices.
Ahluwalia also rubbished the theory that since oil retailing companies were making profits there was no reason to hike fuel prices, arguing that these firms were showing surpluses on account of subsidies being paid by the government.
“I am saying the Left is completely and totally wrong and deliberately misleading,” the plan panel deputy chief told Karan Thapar’s "Devil’s Advocate" programme for CNN-IBN channel, on the issue of pricing petroleum products.
“I think they have a lot of good economists and they know that they are making a purely political point. These arguments have absolutely no economic rationale because they are not bringing out the other side of the picture.”
In a development that was criticized severely by opposition parties, the government late last month decided to end the curbs on petroleum pricing, allowing state-run oil retailing companies to hike prices of petrol at will. It also raised prices of cooking fuels.
The price of diesel, as a result, went up by Rs 2 a litre, kerosene by Rs 3 a litre, petrol by Rs 3.50 a litre, and cooking gas by Rs 35 per cylinder. The opposition even called a nationwide shutdown July 5, but the government ruled out a rollback.
During the interview, Ahluwalia defended the government’s move.
“I think if you took a considered view of it, the proposition that the oil companies were making a profit and that there is no reason to raise prices is wrong,” said the Oxford-educated economist.
“The only reason they were making a profit is because we were paying subsidies.”
Ahluwalia conceded that taxes in India on some petroleum products were higher even than the rates prevalent in some neighbouring countries, but added that in this area, too, there was a social and logical angle.
He said the reason why gasoline and diesel were cheaper in neighbouring countries was because in India kerosene and cooking gas were cheaper. There is an element of cross-subsidy that is necessary, given which section of the society uses such fuels.
“So, somebody has to get to pay for it - either it would be paid out of general revenues or it would be paid from petrol. I think it’s better if it is paid from petrol because in any case we want people to move away from private transport to public transport.”