Decision over diesel price reforms evokes mixed reactions

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)