The Hindu : Tamil Nadu / Chennai News : DMK, Congress defend hike in petrol, diesel prices

Online edition of India's National Newspaper
Wednesday, Jun 22, 2005

Tamil Nadu

Tamil Nadu - Chennai

DMK, Congress defend hike in petrol, diesel prices

Special Correspondent

Oil majors losing Rs. 72 crores a day due to the rise in crude prices

CHENNAI: United Progressive Alliance partners on Tuesday sought to justify the hike in petrol and diesel prices as unavoidable. They asked why the State Government had not taken steps to reduce the tax on petroleum products to reduce the burden on the common man. The Left parties, though, condemned the hike and demanded that it be withdrawn.

Dravida Munnetra Kazhagam president M. Karunanidhi said that the oil majors were losing Rs. 72 crores a day because of the rise in crude prices. In March and April alone, their total loss was Rs. 1,424 crores.

The oil majors had been requesting a price hike for some time now but the Centre had so far put it off. Only when the situation became unmanageable did the Government opt for a hike but it did not touch kerosene and liquefied petroleum gas (LPG), he said.

Mr. Karunanidhi said Chief Minister Jayalalithaa had the Assembly elections in mind when she announced that the bus fares would not be hiked. The people had not forgotten the steep rise in bus fares when the AIADMK came to power in 2001.

Sales tax high

In Tamil Nadu, the sales tax was very high — as much as 27 per cent. This fetched the Government Rs. 3.1 crores a day. The additional expense incurred by the transport corporations because of the hike in diesel prices was Rs. 81.6 lakhs a day. In spite of this, the Government made over Rs. 2.27 crores a day. In a month, this translated into an additional income of Rs. 68.37 crores. Hence, it was not necessary to hike the bus fare, he claimed.

If Ms. Jayalalithaa wanted to reduce the burden on the people, she could reduce the sales tax on petroleum products, Mr. Karunanidhi said.

"Bitter decision"

Tamil Nadu Congress Committee president G.K. Vasan described the price hike as a "bitter decision" taken by the Central Government in the interest of the economy. On Ms. Jayalalithaa's criticism, he said she had spoken as if she alone had the interest of the country in mind.

Pattali Makkal Katchi founder S. Ramadoss said the fact that kerosene and LPG prices had not been touched should be welcomed. He wanted the prices to be reduced as and when the international prices of crude fell.

Dr. Ramadoss said that the State Government also had the responsibility of ensuring that the prices of essential commodities did not go up.

While other constituents of the Democratic Progressive Alliance also justified the Centre's decision to increase prices, Marumalarchi Dravida Munnetra Kazhagam leader Vaiko urged the Government to "reconsider" the move.

Considering the fact that price hike would affect the poor, the middle income groups and the farmers the most, he urged the Centre to accept the alternative proposed by the Left parties and withdraw the hike. Mr. Vaiko warned that it would have a "cascading effect" on inflation.

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