PM’s justification of petro price hike flawed: CPI(M)

PM’s justification of petro price hike flawed: CPI(M)

New Delhi: CPI(M) on Wednesday said Prime Minister Manmohan Singh’s justification of hike in petrol prices reflects a “flawed economic thinking and insensitivity to the sufferings" of the people due to price rise.

In a statement, the party said Singh’s assertion that the impact of the fuel price hike will lead to only 0.4% rise in the wholesale price index is a “gross miscalculation" since it does not take into account the impact of high fuel prices on food prices.

“Food price inflation soared after the last hike in petro prices in July 2009. At a time when the people are reeling under nearly 20% food price inflation, this round of fuel price hike will amount to a completely back-breaking burden," the party said.

It said Singh’s justification of the hike in indirect taxes on diesel and petrol in the budget in terms of taking a long-term view “reflects a flawed economic thinking and insensitivity to the sufferings of people due to price rise".

Estimates suggest the government seeks to mobilise Rs25000-30000 crore in the forthcoming year through increase in customs duties and excise duties on diesel and petrol.

On the other hand, the statement said, the budget noted that Rs26,000 crore worth of revenue will be lost during the same period due to the cut in income taxes.

“How come the Prime Minister is defending the indirect tax hike in the name of fiscal consolidation while turning a blind eye towards the direct tax cuts?" it asked.