Petrol price hike is an attack on the living standards of millions of working families!

Withdraw customs and excise duties on oil and all its products, to bring down the retail price!

Statement of the CC of the Communist Ghadar Party of India, 23 September, 2011

The Communist Ghadar Party of India condemns the latest increase in petrol prices announced by the oil marketing companies.

This is the eighth hike since June 2010, when petrol prices were deregulated. In this period, the retail price of petrol in Delhi has risen from Rs 47.93 per litre to Rs 67, an increase of nearly 40 per cent in 15 months!  Petrol costs more than Rs. 70 per litre in most other parts of the country.

This eighth hike in petrol prices comes on top of skyrocketing prices of vegetables, fruits, milk and milk products, cooking oil, cooking gas, food grains, pulses, meat and all other essentials of life. Lakhs of crores of rupees have been robbed from our working people through massive inflation in the past two years alone. The hike in petrol prices will hit the daily cost of living for millions of working men and women who travel to their place of work on a two-wheeler or a small car.  It will also raise transportation costs and feed into the general rate of inflation.

Whenever the price of petrol or diesel is raised the government claims that it is because of the “unaffordable subsidy”.  This is a blatant lie because petroleum product consumption is being heavily taxed in our country and not at all subsidized.  The “subsidy” in the central budget is less than one-tenth the total taxes collected from petroleum products. In Rupees terms, petrol costs around 70 per litre in India as compared to 37 in China, 40 in the United States, 39 in Pakistan, 47 in Sri Lanka and 53 in Canada.   

While the working class and large sections of our people are outraged by the frequent hikes in petrol prices, Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, welcomed it with glee.  He is reported to have said, "What has happened … is a good news. I regard that as a vindication (and) an increase in credibility of basic part of the reforms strategy."

This spokesman of the monopoly capitalists is extremely happy that the government has found a way to attack the living standards of the toiling majority while claiming that it is not responsible because prices are now being “market driven”.  This is a fraudulent argument, firstly because the government continues to influence the timing of price hikes, as was seen when no hikes took place for several months before the state assembly elections in West Bengal and Kerala.  Secondly, the big role of government can be seen from the fact that half of what people pay for petrol goes into the central and state government treasuries as tax revenue.  People in India pay more than three times in taxes on every litre of petrol than what Americans pay in the US.

The justification being given for the latest petrol price hike is that the oil marketing companies are allegedly incurring losses on their sales of diesel, cooking gas and kerosene.  However, the oil refining companies, many of whom are also involved in marketing, are pocketing extraordinary profits thanks to the differential customs duty rates levied by the Central Government, of 5% on crude oil and 7.5% on refined petroleum products.  The customs duty on crude oil feeds into the final price charged to consumers of petrol, diesel and all refined products.  The customs duty on products does not fetch any significant revenue for the government, because there is hardly any refined products being imported.  It only serves to raise the “import parity price” paid to Reliance, Indian Oil and other domestic refining companies.  The differential rates serve to guarantee excess profits for these monopoly corporations and provide them a competitive advantage in the world market. 

If customs duties on crude and petroleum products are done away with, then the “import parity price” paid to the refining companies will fall, along with their excess profits.  The retail prices of petroleum products can be significantly brought down.   If central excise duty is also abolished, then the retail prices will fall even further.

The central excise duty collected from the sale of domestically produced petroleum products in our country was about Rs. 87,000 crore in 2009/10.  The estimated value of “Revenue Foregone” from corporate income taxes in 2009/10 was Rs. 80,000 crore.  In other words, it is perfectly possible for the Central Government to do away with both excise duty and customs duty on crude and petro products and largely compensate this by doing away with concessions for corporate tax payers.

The working class and peasantry and other working people cannot and must not accept the position of Montek Singh that the Central Government is no longer responsible for the price of petrol.  The Central Government has many instruments at its command, such as the policy of taxing crude oil and its products.  These instruments are currently being used to guarantee super-profits to a few monopoly capitalists, at the expense of the living standards of the toiling majority.  It is this policy and orientation that is responsible for frequent attacks on the people’s livelihood.

The working class and peasantry and other working people can and must demand and fight for the complete and immediate abolition of all central taxes on oil and its products, including customs and excise duties.


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Planning Commission    petrol subsidy    petrol price rise    Montek Singh Ahluwalia    monopoly capitalists    Central Government    Oct 1-15 2011    Voice of the Party    Rights     Economy    

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