FM okay with cut in petro duty, but warns of fiscal load
The finance ministry has an open mind on further cut in excise duties in the petroleum sector, but FM P Chidambaram has said the resultant reduction in revenue will make it more difficult to finance the government’s ambitious social sector program...
By TNN |
NEW DELHI: The finance ministry has an open mind on further cut in excise duties in the petroleum sector, but FM P Chidambaram has said the resultant reduction in revenue will make it more difficult to finance the government’s ambitious social sector programmes.
He said this, while replying to a debate in the Lok Sabha on price rise. The fiscal burden would rise further, he indicated, thanks to food subsidy which has been going up.
The minister put the onus on state governments for not doing enough to curb rising prices of foodgrains and black-marketing. He said they could invoke the Essential Commodities Act, after taking due sanction from the Centre. “We will give permission immediately,” he said and added that the Act would empower states to fix limits on stocks traders can hold, address the issues of hoarding and price manipulation.
The ECA is a national-level law that allows state governments to issue, with the approval of the Centre, control orders on specific commodities to ensure their regular availability. With the removal of quantitative restrictions on imports, and the foreign exchange scarcity that had plagued India till the reforms of the ‘90s being a relic of the past, the government had reduced reliance on administrative measures to control price, preferring instead to make markets work better.
Many commodities have been taken off the ECA list, as a result. Mr Chidambaram also said that a combination of fiscal, monetary and supply actions was under way by the Centre to keep prices under check. He sought to assuage the feelings expressed by the members of the House saying prices would be brought under control. “There is no reason to assume a relentless increase in prices,” Mr Chidambaram said.
ADVERTISEMENT
At the same time, he added, the Centre was “acutely conscious” of its responsibilities to moderate prices and no sense of alarm should be spread. However, the minister faced a walk-out by the entire Opposition, led by the BJP as well as Left parties, the SP and coalition partner RJD.Mr Chidambaram told the House that there was no cut in allocation for PDS, but off-take was way below the availability. The problem had arisen as the distribution systems in many states were saddled with problems. He claimed that the government had not increased the issue price of wheat and rice for ration card holders, both below and above the poverty line since July ’02, despite repeated increase in procurement prices.
He also urged the parliamentary standing committee to clear the amendment Bill for passage of the Forward Contracts Regulation Act in the current session of Parliament. The minister also assured the House that subsidies were not being cut. “We are not reducing subsidies. On the other hand, food subsidies are going up,” the FM said, adding various measures initiated should have effective impact on prices.
Detailing the measures taken for controlling prices of pulses and sugar, he said this included augmentation of stocks, improvement of supply chain, an effective instrument to check the price rise, along with fiscal and monetary measures. The minister defended the decision to import wheat, saying this was part of the efforts to augment stocks both in public and private sectors that could have a psychological effect against speculation.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
