CPI-M suggests measures to stave of petroleum price hike

The common man need not pay for "government profligacy," the Communist Party of India-Marxist has said, warning it would resist the proposed move to raise petroleum prices by as much as 30 per cent.

Instead, the CPI-M has a plan to avoid the ''cascading effect,'' on overall prices the planned hike might have. This will be presented to the United Front steering committee, scheduled to discuss the issue this week, CPI-M sources said.

The CPI-M blames the massive Rs 160 billion deficit in the oil-pool account on luxury imports for the automobile sector, failure to step up domestic production and diversion of OPA funds to cover budgetary deficits since 1993.

Challenging the government view that there is no option but to hike petroleum prices, the party's plan seeks penal taxes on automobiles above the 1000 cc capacity but exclude smaller cars used largely by the middle-class.

It also seeks that the government cease starving the Oil and Natural Gas Commission of funds and reverse a move to dismantle it as indicated by the reduction in allocation for oil exploration by Rs 12 billion in the last Budget.

The CPI-M plan demands drastic changes in the management of the OPA itself which, it says, has been cynically used by all governments as a ''goose that lays golden eggs''. It claimed that whenever the OPA shows a deficit the government passes the burden onto the common man by hiking petroleum prices but never bringing down when there is a surplus. It said when international oil prices fell in the late eighties and early nineties, prices in India did not fall despite a surplus in the oil-pool account.

If the Rs 44.29 billion taken from the OPA in 1993 was returned at a rate of 15 to 18 per cent (which is what it pays on borrowings to buy crude) the deficit would straight away drop by Rs 60 billion, it said. The CPI-M also pointed out that the present government has also failed to return to the OPA the Rs 43.6 billion of extra revenue realised as customs duties against oil imports in 1996-97. Worse, the Rs 260 billion collected until 1996 as levies under the Oil Industry Development Act is missing, except for a paltry Rs 9.02 billion transferred until 1991-92. Since then no money has gone into developing the domestic oil industry. Instead the funds have been diverted into covering successive budget deficits, the plan claimed.

''After depriving the oil industry of funds meant for its development how can the people be asked to pay the price for the finance ministry's persistent profligacy?'' a Politburo member asked.

He pointed out that customs duties are levied against imports to protect domestic industry and not to earn revenue as levies on oil imports have been treated. In fact, the Politburo member said, the OPA deficit would have been far less if no customs duties were levied on petroleum imports. In that case, the oil sector would have contributed Rs 342 billion through levies in 1996-97 to the central and state exchequers.

The CPI-M plan also accused the government of manipulation to rob the OPA of natural gas. Natural gas has not even included in the OPA, although the ONGC is the main player in the sector.

Natural gas prices are artificially kept below international rates by about 50 to 60 per cent, essentially to subsidise the fertiliser industry. But more than 40 per cent of natural gas (not liquefied petroleum gas, which is a by-product of petroleum refining) is used by various non-essential and non-priority industries which need no subsidy.

The CPI-M plan suggests raising natural gas prices for industries other than those manufacturing fertilisers, back to international levels, thereby increasing OPA revenues. A Rs 1,000 increase per 1,000 cubic metres of natural gas alone would fetch Rs 20 billion in revenue whereas prices have been kept static at a grossly unrealistic Rs 2,470 per cubic metre for the past seven years, it said.

The OPA deficit is entirely contrived, with surpluses being regularly siphoned off to meet overall deficits while partial accounts are put forward to the public to justify price hikes, the Politburo member said.

If all the money due to the OPA is returned it would not only prevent hikes in petroleum price but also help generate Rs 600 billion which can be used to substantially lower the prices of cooking gas, diesel and kerosene, which deserve maximum subsidy.

The Politburo member said such steps were never taken because successive governments have burdened the people to help big businesses make a profit.

"These governments have seen themselves as chartered accountants rather than as repositories of the people's mandate,'' he said.