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Decision over diesel price reforms evokes mixed reactions

New Delhi, Sun, 22 Apr 2012 ANI

New Delhi, Apr 22 (ANI): Chief Economic Advisor Kaushik Basu's statement on deregulating diesel prices and tough decisions on subsidies evoked mixed reactions from politicians and economic experts on Sunday.

Reacting to Basu's comments, senior Samajwadi Party leader Mohan Singh said the government was only trying to increase taxes and duties, rather than focusing on finding ways to ensure economic welfare of the masses.

"Basu is nothing but a mouthpiece of the government. Mr. Pranab Mukherjee has repeatedly said that the time is ripe for taking tough decisions on the economic policy front. What he means by those tough economic decisions is to increase the service and excise taxes on all items, and to end all the subsidies that are being given on petroleum products," said Singh.

"Besides this, he does not have any plan to strengthen the economic infrastructure for the welfare of the people," he added.

Echoing similar views, Communist Party of India (CPI) leader Atul Anjan urged the government to withdraw or reduce taxes to bring down prices of petroleum products.

"Why they are trying to bring this whole diesel issue in a different way? Why do not they withdraw the taxes, the customs, the excise, the sales tax on the crude oil, diesel and petrol. They should learn a lesson, that in Goa, rupees prices of petrol have gone down by 11 per litre, because the state government has lowered down the sales tax. Why the Government of India is trying to collect the money in its own kitty by making excise and custom duty and other sales tax?" said Anjan.

Meanwhile, Narinder Taneja, an expert on economic policy, lauded the decision's long-term impact, while suggesting the government to introduce the diesel price hike in a phased manner.

"Look, the government of India's own companies, such as Indian Oil, Bharat Petroleum, Hindustan Petroleum, these companies are bleeding. These are practically bleeding to death, and the country cannot afford it. Can the Indian economy afford such large companies such as Indian Oil or Bharat Petroleum or Hindustan Petroleum to fall so sick that they will never be able to come back to their normal life in the future?," he said.

"I think, you know, Mr. Basu's suggestion that the government is seriously considering at least partially deregulate the diesel price is a welcome move. It is a move which was long overdue and I personally feel the government should move in that direction, of course in a step by step manner," added Taneja.

Earlier in the day, Basu had hinted that the government could partially deregulate the prices of diesel and take tough decisions on subsidies in the coming months.

Though Finance Minister Pranab Mukherjee has vowed to raise fuel prices as soon as possible to tackle a rising subsidy burden and large deficits, the move is politically fraught for the coalition government, already under fire over high inflation.

Diesel prices were last raised in July and the government has still not fulfilled a promise to fully liberalize the market. It was expected to raise prices earlier this year. (ANI)

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April 24, 2012 at 2:30 AM

Mittal has collaborated with HPCL in Bhatinda.if the OMCs are losing Mittal will NOT join them!
CAG Audit of the OMCs is mandated.Merge Oil producers like ONGC,OIL with refiners like IOC,BPCL,HPCL etc.


April 24, 2012 at 2:26 AM

I challenge Taneja to prove how these OMCs are "bleeding to death".The so-called 'under-recoveries' which are claimed to be the reason for the LOSSES are IMAGINARY and NOT REAL.Hence the LOSS is also NOT REAL,but IMAGINARY.
A strange timeline of the so-called 'under-recoveries':-
i. MM Singh becomes PM of India in 2004
ii.Shell India allowed 100% FDI in LNG with a terminal in Hazira in 2004!
iii.The OMCs start reporting/claiming losses under, "under-recoveries' from 2004!!!!!
iv.Vikram Singh Mehta of Shell India was an Advisor to the Ministry of petroleum And NG,GOI for 4 years.GOI infiltrated?
I,earnestly request him to google for the following:-
1.What are under-recoveries
2.M M Singh the economic hitman

Nitin N Varia

April 23, 2012 at 4:26 PM

The Statement of Intention of Dr. BASU OR Dr. RANGRAJAN OR FM Shir Pranavda or even PM is all wisdom and a necessity but devoid of action only translates into credibility. It is evident the UPA 2 needs to carry all stake holders together that also is widom. But this can not take infinite time. All parties are advising Government to reduce taxes and excise and inflation is a headache than what other magic the FMor all his wisemen can possibly do is abundantly clear. By delaying or blaiming allies or oposition the Government is loosing credibility. The FM needs to transcend beyond intent to implementation of the vison he carries for India.



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