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Sinha rules out rollback in diesel prices

Finance Minister Yashwant Sinha has ruled out a rollback in increase of diesel price, saying that it would not affect farmers.

In a programme on a private television channel, to be telecast on Saturday, Sinha said, "Don't forget that only two months ago the same government reduced the cost of diesel by a rupee. We have only gone back to the earlier rate."

He said 50 paise of this rupee would go to a central board fund for development of national highways and major state roads. The other half will go towards development in rural areas.

He said the government takes all such expenses into account while announcing support prices of crops for farmers.

"You would also be aware of the increased [support] prices for farmers in the last 12 months. I am proud of the fact that in both budgets, farmers have benefited more than any other sector," he said.

Attacking the system of subsidies, the finance minister said, "Farmers should not expect free electricity or water as this is what has lead to the fiscal imbalance.

"We are heading towards freeloading and that won't work. You pay the right price and in return you will get all the help," he said, when told that housewives were upset with the rise in LPG prices. The government gives a subsidy of Rs 100 on every cylinder, he said.

Referring to the pre-budget price hike for rice, wheat, sugar and LPG, he said, "The only difference this will make is that if the subsidy bill in 1999-2000 is expected to reach Rs 250 to Rs 260 billion, we may be able to stop it at Rs 220 to Rs 230 billion. This budget will not lead to rise in prices. We had raised them before the budget."

Sinha said ten per cent surcharge on income tax and corporate tax would help in reducing the market borrowings.

Reacting to criticism of former finance ministers Pranab Mukherjee, P Chidambaram and Dr Manmohan Singh, Sinha said the government has to reduce the loans it takes.

"If we don't reduce these, the rate of inflation will definitely by affected," he said.

"While it is not possible to put an end to borrowings immediately, I have also said that within four years we will not meet the expenses by taking loans. To achieve this, we are working towards reduction of government expenses and increase of government income," Sinha said.

"The Rs 880 billion we have to give next year towards interest money alone is totally due to these former finance ministers. I do not want to leave any such burden for future finance ministers," he said.

Referring to the eleven per cent tax on urea, Sinha said, "Since 1994, there has been no increase in prices of urea while prices of all other things have increased. The 1998-99 budget has Rs 220 billion in expense on various subsidies, money for which is taken as loans from the market. The result has been that our loan within the country has risen from less than Rs 2500 billion in 1991 to more than Rs 8500 billion this year."

Saying that it would not be right for this generation to leave such a largesse of loan for the coming generation, he added, "It is very simple to complain about price rise of urea and diesel, but this will have to be borne by someone somewhere."

Referring to the process of rationalisation of excise duty slabs, he said, "The 11 slabs in excise duty was creating problems for people as well as trade and industry. We have tried to rationalise this into three slabs. There was no other method of simplification. But we are deciding our future direction now. Like other countries, we hope to follow the value added tax system. All these constraints will be removed and tax would be applicable only on value added."

Acknowledging the people's concern about funds not reaching allocated schemes, he said, ''more and more of the expenditure at grassroot level is being redirected through gram sabhas and panchayats so that people can hold them accountable instead of being in the hands of government officials''. The small rise in postal rates had been necessary because of a Rs 5.35 billion deficit in postal department again to be blamed on subsidies in almost every postal service.

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