Industrialists in Punjab are upset over the Centre’s decision to partially deregulate diesel prices, allowing an increase of 40-50 paise a litre per month.
“The government’s decision to deregulate diesel prices partially has come as a shock to the industrial community. Diesel is the backbone of the industry as the transportation and the production process is dependent on it. The engineering exports are not doing well due to a slowdown in the global economy and instead of boosting exports, the government has increased diesel prices. Although the present raise is nominal, the effect would become apparent once another hike of 50 paise takes place next month,” Ashwani Kohli, Senior Vice President, Punjab Chamber of Small Exporters told Business Standard.
Kohli said that the worst-affected with the rise would be micro, small and medium enterprises (MSMEs).
In Punjab, small and medium-sized enterprises (SMEs) and small-scale industries (SSIs) contribute 99 per cent of the total industrial units in the state. According to the state’s data, that is 1,70,500 working units upto 2011-12, with a fixed investment of Rs 9,000 crore and with a production value of Rs 60,000 crore.
Experts suggested that instead of raising the price, the government should reduce the excise, customs duty and VAT on diesel, which constitutes a significant portion (around 50 per cent) of the diesel cost.
“We have already been hit by the slowdown in Europe and the recent decision will further increase the input cost. Thus, there are chances that exporters might lose in competition to China,” said Gursharan Singh, a hand tool exporter from Jalandhar.
Earlier, Punjab Chief Minister Parkash Singh Badal assailed the Congress-led UPA government for deregulating diesel prices. In a statement, the chief minister slammed the Centre for allowing frequent small hikes over a period of time by putting in place a ‘deregulated diesel mechanism’ and described it as a ‘retrograde step’ to crush the farming community, which was already reeling under the exorbitant debt of Rs 32,000 crore.
The unfortunate decision, coupled with the non-remunerative minimum support price (MSP), would further bring the depressed peasantry of the state on the verge of an economic disaster, said Badal.
He said the hike in the administrate diesel price was a sensitive issue and the Centre should have taken all states into confidence before taking the decision. Badal said the move was an attempt on the part of the UPA government to extend largesse to the big oil companies at the cost of the common man.
He added that the Centre should have realised the cascading effect on the prices of essential commodities, as diesel was consumed in large quantities through public transport and freight carriers and the inflationary trend would crush the back bone of the common man.
Coming down heavily on the Centre, Badal said the move was a clear attempt on the part of the UPA government to extend largesse to the big oil companies at the cost of the common man.
He said that due to the anti-farmers’ stance of the Union government, the agriculture was no longer a profitable venture and the brave farmers of the state who had played a pivotal role in making the country self-reliant in food production were now left in the lurch.
In Punjab, diesel is priced at Rs 46.55 per litre post-deregulation.
