Get cracking, speed up growth
The government has finally passed the buck on raising diesel prices to the oil marketing companies, and is introducing a dual pricing system. Going by the government’s waffling nature and its past record, one does not know how long this partial deregulation will last. The last hike was a hefty one of `5.63 per litre in September 2012, and three precious months were lost by keeping bulk consumers untouched.
The OMCs have now been “permitted” to raise diesel prices by 45 paise per litre per month for individual consumers; and by `11 for bulk consumers like telecom towers, malls, cinema halls, etc, to gradually bridge the gap of `9.60 per litre between the cost and selling price to OMCs. The diesel hike is expected to cut the government’s subsidy bill by `12,900 crore, which seems minuscule considering that the diesel subsidy accounts for 59 per cent of the `1,60,000crore fuel subsidy. This dual pricing is a good move as it is unfair to expect the taxpayer to subsidise bulk consumers. One feels it is still unfair that owners of luxury and high-end diesel cars will still be subsidised by taxpayers when the government can well impose some sort of tax on them. After all, diesel car manufacturers don’t hesitate to hike their prices by `20,000-30,000 and there is not even a murmur.
The common man is paying an enormous price for the government’s administrative malfeasance: it did nothing since 2004 except waffle and suffer from policy paralysis, whether in tackling ballooning subsidies or the deficit. Even today, besides policy announcements, there is very little that has happened in reality. The business community as well as foreign investors still complain of delays in decision-making and corruption. The government has been paying lip-service to the urgent task of making doing business in India easier. But except for Gujarat, where starting a new business is a lot easier than in other parts of the country, there is the same red tape and bureaucratic delays. The government is even silent on the National Competition Policy, which will not only add an extra two per cent to growth but also help to cut down corruption and crony capitalism. The silver lining is the promise that finance minister P. Chidambaram has made to bring the Goods and Services Tax in the Budget Session of Parliament. One only hopes it will be swiftly passed.