On the deregulation of fuel prices
Posted by Gokul
Saw some buzz on the recent deregulation. Here is the rationale.
The subsidy that we get on fuel are
LPG a whooping rs.267
What it means is that it costs HPCL, BPCL etc 54 rupees to take a litre a petrol to the petro pump, but they sell at rs.48. In the process the total losses last year was rs. 1 lakh crore. Who takes this burden? Obviously the govt. How?
1. By raising indirect taxes (you cant raise direct taxes-can cause more evasion)
2. By cuts on social sector spending
3. Printing notes
4. Asking ONGC and other upstream companies to give a part of their profits
These three acts directly affects the poor as indirect taxes are regressive (more burden on poor) and printing notes cause inflation (again regressive). Consider the fourth point. If you take away a part of their profits, those companies will have less for investments in future mining projects and acquisitions. Remember ONGC losing out to CNPC (China) in every global bid as we didn’t have the cash. So the govt appointed a committee under Kirith parekh to study this. the current decision is based on that committee’s recommendations. By deregulation
1. Burden will be equitably shared
2. We l use less (good for environment)
In short we will pay the exact price.
So relax people. Previously when you burned the fuel in your bike, you were not only harming the environment but taking a bite off the poor man’s plate. Now will be relieved of the second crime. The government has something good for you!!!