Why should only petro consumers pay for infra projects: Reddy

Former oil minister S Jaipal Reddy has questioned the Centre's policy of utilising its revenues from petroleum products for infrastructure projects, saying the high prices of diesel and petrol are hitting the middle class hard.

"Why should only the consumers of petroleum products pay for all the glitzy projects of the Government of India?" the senior Congress leader asked.

He told PTI here that when the Congress-led UPA was in power, the government was spending Rs 1.2 lakh crore on gas subsidy when the fuel prices were high.

"Today, your (the Centre's) gas subsidy is Rs 40,000 crore. The saving of the Government of India because of low international prices is nearly Rs 1.5 lakh crore," claimed Reddy, who was the petroleum and natural gas minister under the UPA II.
 

He alleged that while the government is saving on subsidy, it increasing its revenue, "all at the cost of the consumer". "They (the hike in petro products) are borne by the middle classes. Most people have only scooters or small cars. How would they be able to eke out their living?"

Reddy sought to make a strong case for the government to reduce excise duty on petroleum products. "Let the boon of low international prices be passed on to the consumer; why are you converting this accidental boon into a curse?"

Asked if the Centre would cut excise duty on these products, Oil Minister Dharmendra Pradhan last week said, "That is a call the finance ministry has to take, but one thing is very clear -- we have to balance developmental needs with consumer aspirations."

"We have to fund massive highways, and road development plans, railway modernisation and expansion, rural sanitation, drinking water, primary healthcare and education. Allocation on all these heads has gone up significantly. Where do we get resource for these?" Pradhan had said.

Reddy reiterated that bringing petroleum products under the ambit of GST is "desirable", but not feasible as the states would oppose such a move.

"While putting it (petroleum products) in GST is advisable and desirable, it's not a feasible proposition because state governments... Of the BJP also, will not agree," he claimed.

Saying many states have drastically increased VAT (value added tax), Pradhan had said, "It is high time the GST Council considered bringing petroleum products under the ambit of GST."

Asked for his comment on Pradhan's statement, Reddy said, "They (the NDA government) knew that the GST Council would never include this (petroleum products). The Government of India never insisted on it. State governments would not agree."

For the central and state governments, petroleum products have become the "first resort" for raising revenues, the former Union minister said.

For every problem, the states increase the cess (VAT) on petrol and diesel "because with one increase, they mop up Rs 1,000 crore to Rs 2,000 crore per annum additionally" depending on the size of the state, he pointed out.

Reddy alleged that the government is trying to "indulge in profiteering", saying the "current policy of keeping the excise duty high when international prices are ruling lower is very incorrect".