Countering the Left’s alternate pricing proposal to neutralise fuel price hike through tax cuts and collecting revenue from “market manipulators” rather than the common man, Petroleum Minister Murli Deora has said that the decision was “not a matter of choice”.“Given our high import dependence, the government was pretty much compelled by international circumstances. Most forecasts suggest that the price of crude is likely to touch even higher levels in the coming months,” Deora wrote to CPM general secretary Prakash Karat on Wednesday.The three-page letter highlights that the government and the oil industry will have to bear the lion’s share of the Rs 73,500-crore burden that’s estimated to accrue due to spiralling crude oil prices.“In aggregate terms, the government and oil industry will bear, in one or other form, Rs 61,300 crore of the total liability arising out of the increase in international oil prices. The consumers’ share of the burden will only be Rs 12,200 crore (just 16.6 per cent),” stated Deora.In response to a proposal for a cut in excise duty, he has written that the government was contributing by providing bonds worth Rs 28,000 crores.“It is immaterial whether this relief is provided through excise duty reduction or through bonds, as the burden is borne by the exchequer in either case affecting the government finance equally,” he said.On tax cuts, Deora has expressed his government’s helplessness saying there was “limited manoeuvring space” for revenue mobilisation.“In our case, these taxes assume an even greater significance in view of our commitment to several large flagship social sector initiatives like National Rural Employment Guarantee Programme, Sarva Shiksha Abhiyan, Mid Day Meal, Integrated Child Development Scheme and National Rural Health Mission, all of which have significant expenditure levels,” he said.At best, Deora suggested, the tax cuts could be taken up with states which earn an extra 70 paise on a litre of petrol and 25 paise on diesel as sales tax due to the price hike.“I do appreciate that we need to take a closer look and if you think it proper, I could request the Finance Minister to take it up with the Empowered Committee of State Finance Ministers,” wrote Deora.Separately, he has requested chief ministers to forgo the incremental sales tax that they earn because of the current hike of Rs 4 and Rs 2 per litre on petrol and diesel, as that would not impact the state’s budgeted revenue.
