An exemplary move?

On completion of its two years, the Jharkhand government announced a slew of wide-ranging welfare schemes. While most of these schemes are crucial from policy perspective, the state government's decision to slash petrol prices by Rs 25 for two-wheelers for a purchase up to 10 litres per month has come into the spotlight. The scheme will come into force from January 26, 2022. The Jharkhand government's decision, in the middle of its term, could be termed exemplary. It shows that it is within the capacity of the governments to control the soaring fuel prices. All that is needed is a strong political will. The message is loud and clear, if Jharkhand can do it, why not the Centre and the other states. It should come as no surprise if Chief Minister Hemant Soren attracts criticism from Opposition parties on account of political gimmicking. The state CM, after all, has been specific in castigating the erstwhile BJP government on a variety of policy issues. The essence of the matter — reducing fuel prices — should, however, not be lost amid political mudslinging. On the downside, the limits on the quantity of petrol to be provided under the subsidised rate, along with its specificity for two-wheeler vehicles, narrows the scope of the scheme. Subsidised petrol for two-wheelers appears to target the youth of the state. One of the major problems with the high prices of petrol and diesel is that it sends ripples across various sectors — increasing the prices of other essential commodities on account of increased transportation charges. Soren's decision to make a steep cut in petrol prices nowhere appears to contain this ripple effect, as transportation of commodities is generally carried out by bigger diesel vehicles, and not two-wheelers. The state is known to have a huge Adivasi population that struggles even for meeting basic needs and two-wheelers may be just a privilege vehicle for them. This leaves the government's decision to be centered around middle- and upper-class youth — leaving behind lower-income groups. Even if the upper strata of the low-income groups own a two-wheeler, the function would largely be limited to personal transportation. Since the scheme comes with a significant public expenditure, it wouldn't be wrong to expect it to benefit a broader population. The government certainly had the option to keep rate cuts modest and cover a larger population base. Nevertheless, one has to wait and watch to figure out the real rationale behind the move. Amid all this, what is evidently clear is that with a strong political will, governments can significantly reduce the burden from the shoulders of the poor. Towards the start of this month, the Delhi government also demonstrated the same fact when it reduced the Value Added Tax to cut petrol prices by Rs 8. Currently, the petrol prices in Delhi stands at Rs 95.41 per litre and diesel prices stand at Rs 86.67 per litre. For all the other metros, petrol prices continue to be above the century mark, with Mumbai topping the list at around Rs 110 per litre. Cities like Hyderabad and Bengaluru also price petrol above Rs 100 per litre. Keeping the comparison aside, and focusing on absolute terms, petrol and diesel prices in even Delhi are not low, by any accounts. It is just the tweaked expectations of the people that may give a false perception of lower petrol prices in certain cities. Jharkhand government's decision is a pointer that there is indeed a great scope of policy intervention on this front. The time perhaps has come when the Central government needs to revisit its excise and custom policies. Right since 2015, the excise duty on petrol and diesel has been on the rise. Excise duty has been raised 3-4 times in comparison to 2014 levels. So have risen the government's revenues over the same period. The revenue of the government and the burden on people's pockets needs to be balanced sooner rather than later. Apart from the Central government, state governments also need to cut their Value Added Tax to relieve the people. Jharkhand and Delhi governments have set the example, states need to follow suit. It goes without saying that only judicious revenue sharing by the Central government will enable states to do so. To sum up, it can be said that the Jharkhand government's decision to slash petrol rates with certain constraints falls short of covering a general population but has paved the way for positive changes in this direction. Other state governments and the Centre must strive towards effective course correction.