The 'new' face of nationalism
Government decision of increasing excise duty on petrol and diesel in India at a time when global prices are falling points to a troubling pattern of blatant profiteering
Profiteering has become the new nationalism for India if the two recent orders of the current regime happen to be any indication. While 800 million people are facing conditions of near starvation, the government has allowed diversion of millions of ton surplus rice with FCI to be converted to ethanol to be used primarily in biofuel and has increased taxes on petroleum to the highest level in the world. Affordability of the people in precarious condition due to lockdown seems not to be the government's consideration since they have decided to sell petroleum at exorbitant prices. For example, one litre of petrol in Delhi costs only Rs 18.28 but is sold to the consumer at Rs 71.26 and one litre of diesel cost only Rs 18.78 but is sold at Rs 69.39.
The Government resorting to profiteering is a show of shamelessness even as people were locked in their homes, apparently, for saving their lives from the dreaded disease called COVID-19. Citizens were made to understand that the government would thus find time to make India's already ailing health system ready for tackling the pandemic. It did not happen because it was not the priority of our governments. Only that much was done which was considered necessary by our political establishments to show themselves doing whatever was possible for them to do but, in reality, they were busy with petty politics and resorting to profiteering in the name of nationalism, at a time when 800 million Indians have lost their livelihood with no resources left with them to buy even food, medicine or masks. This has resulted in ever-increasing COVID-19 cases on the one hand and pennilessness of the people on the other.
Profiteering will break the backbone of the people but who cares! The Government has increased the taxes to 69.3 per cent on petroleum which is highest in the world. The Union Government will gain by an amount close to Rs 1.7 lakh crore in additional revenues this fiscal due to this price spike. The hike on petrol was Rs 10 per litre and on diesel, Rs 13 per litre. It was done to mop up gains at a time when international oil prices are witnessing a steep fall to a two-decade low.
The hike that took effect earlier this week was the second hike in excise duty in less than two months, a period that almost coincides with the lockdown of the country that has put a full stop on the economic activities of the country, rendering millions jobless and penniless. March 14 excise duty hike of Rs 3 per litre each on petrol and diesel had enabled the Government to gain as much as Rs 39,000 crore. Thus, the Government stands to gain as much as Rs 2 lakh crore at 2019-20 level of consumption.
Government of India's increase in petrol and diesel taxes by $21 per barrel and $27 per barrel respectively will result in government's tax collection increasing by about $21 billion if the tax hike is maintained for the full year.
It is also worth mentioning that the government had raised excise duty between November 2014 and January 2016 on petrol and diesel on nine occasions and earned astronomic amount in profit because of plummeting global oil prices. In those 15 months, the Government increased it's earning from Rs 99,000 crore in 2014-15 to Rs 2.42 lakh crore in 2016-17. Since 2014, duties on petrol and diesel have been increased 12 times. A reduction has occurred only twice.
Following the order of fresh hike on Tuesday, the excise duty on petrol has gone up to Rs 32.98 per litre, while on diesel it is Rs 31.83 per litre. This represents a 248 per cent increase in duty on petrol since April 2014 and a 794 per cent increase in diesel. The increase in VAT during the same period is to the tune of 54 per cent for petrol and over 184 per cent for diesel.
The Indian basket of crude oil price has crashed over 64 per cent this year from $65.5 per barrel in December 2019 to just $23.38 per barrel on Monday. Last month, it had touched a low of $19.9 per barrel. Retail prices, however, did not come down commensurate to this decrease and remained steady at Rs 69.87 per litre for petrol and Rs 62.58 per litre for diesel in Delhi for the whole of last month.
By mid-May, India's strategic storage capacity of 5.3 million metric tons will be full. Apart from that, our oil companies have 7 million metric tons of floating oil in their contracts. We have booked them. We have purchased them. Our domestic online capacity in crude oil or products also has a storage capacity of around 25 million metric tons. Put together, we have nearly 38 million metric tons of product and crude oil storage facilities. This is around 18 per cent of our annual requirement of energy. This is the maximum capacity we could hold and we are holding that. However, the question is, can the Government not allow the benefits of the same passing down to the common people?
The Government is trying its best to make the people believe that it is an extraordinary time, and it needs money to tackle the Corona crisis. They are right in claiming that but wrong in resorting to profiteering under such logic. It is what the Government has been doing since 2014, and all the profits were squandered. By the end of 2019, India's economic growth declined to a one decade low and joblessness stood at 45 years high. The deterioration continued under the current regime. Few profited by it and most suffered. Corona outbreak and the subsequent lockdown have worsened the condition. The PM, his colleagues and his fan club need introspection and a fresh approach to the crisis before the situation gets out of their control.
Views expressed are strictly personal