Petrol prices: case for reducing taxes

THE editorial “Costlier petrol” (June 7) makes a strong plea for keeping the issue off politics. Officially, administered price mechanism (APM) on petroleum prices had been removed from April 1, 2002 but it continues through the backdoor. Owing to political compulsions arising out of the recent Assembly elections, the fuel price hike was delayed despite the steep increase in international crude prices.

Instead of periodic hike, if the government announces hefty hike in one go, there is bound to be strong opposition. The Left and the Opposition parties want to take political mileage against the hike which is unfair.

Though the hike will pinch the consumer and have a cascading effect on domestic prices, given the rising international crude oil prices, domestic fuel price hike was inevitable. However, there is a strong case for reducing the taxes on petroleum products which constitute a major component of retail prices. Given the high sales tax with wide inter-state variations, there is need for a moderate uniform VAT in all the states.

The current practice of imposing ad valorem duties should be replaced by specific duties which are price neutral. The Centre and the states should not try to take advantage of the rising international crude prices by earning additional revenue.

RAMA KASHYAP, Lecturer in Economics, Chandigarh



There is need for practical and effective remedial measures to reduce the burden of taxation on petroleum products and conserve their use. First, 50 per cent of the selling rate goes in for payment of Central taxes, excise duty and state sales tax. This should be reduced. States should implement VAT in respect of petrol.

Secondly, the government should exercise utmost economy in the use of staff cars, escort vehicles and in organising receptions and ceremonies. Car pools must be encouraged.

Thirdly, it would be economical if government-owned oil-marketing companies are allotted different zones, like the Army Commands, and made responsible to operate the entire marketing network including oil refineries, depots and retail outlets falling in that zone. The best solution would be to amalgamate all the four companies into one to avoid duplication.

And finally, there is an urgent need to set up an exclusive R & D organisation to explore the possibility of extracting gasoline from the natural resource and to invent alternative sources of energy to run vehicles.

Brig HARDIT SINGH KAPUR (retd), Chandigarh


There is a direct bearing of the road condition on a vehicle’s fuel efficiency. A vehicle that has to accelerate or decelerate frequently due to the road’s poor condition, consumes far more fuel than a vehicle running at a constant speed of around 40 km a hour or so on a good road. This extra fuel used by each vehicle on Indian roads adds up to our ever-burgeoning oil imports.

This can be easily avoided if our roads are maintained and widened on priority. Instead of giving sops like free electricity to even well-off farmers, the government should make use of this money in creating the real infrastructure like roads, power stations etc.

The politicians have no right to misuse the taxpayers’ hard earned money.

I am sure, if one-time investment on Indian roads is made, there would be at least 20 per cent decrease in our oil imports.

NARESH KUMAR, Noormahal (Punjab)


This refers to the news-item “Rollback of petro prices ruled out” (June 8). There is merit in the Centre’s directive to the state governments to reduce the sales tax on petrol and diesel. This will help reduce the fuel prices. Some states including Punjab and Haryana have already done this.

The UPA government has increased the petrol and diesel prices many times in spite of protests from the Left parties. The government has failed to hold the price line. The prices of essential commodities have also been hiked during the two years of the Manmohan Singh government.

M.L. GARG, Chandigarh


The Centre increased the diesel and petrol prices on the ground that international crude oil prices have increased. What is the justification of increase in taxes related to petroleum products? The increase in the prices of petrol and diesel will definitely affect the prices of essential commodities. Why should the common man suffer who does not use petrol and diesel directly? The steep hike is highly unjustified.



The price hike seems illogical. The middle class people will suffer the most. But for them what cannot be cured must be endured. Still the people are optimistic about partial rollback of the hefty hike in petrol price. It is also hoped that Prime Minister Manmohan Singh will listen to Congress President Sonia Gandhi’s suggestion for a partial rollback.



Focus on education, health

THERE is an old joke. Once when people demanded bread, the ruler said: why only bread; eat fruits and cakes? Over 70 per cent of India’s population lives in villages. The need of the hour is to provide quality education and medical facilities to people in remote villages.

Instead of providing this, the government seems more concerned with mega projects. Who will these (mega) projects really benefit when the rural youth do not get even proper education?

SURJIT MAHIL, Professor  Emeritus, Coventry (UK)

Long power cuts

The Punjab government should enforce the law requiring shops to close at 8 p.m. to get some respite from the long power cuts. In some cities like Amritsar, some shops are open till midnight.

If the authorities strictly enforce the law, it will reduce the impact of the current power shortage. Early closure of markets will also reduce the traffic flow as fewer people will use vehicles in the evenings. But then, the crucial factor is the effective enforcement of the 8-pm deadline for shops to close. The business community’s cooperation should be sought in this regard.

JAI ARORA, Amritsar



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