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Politics and economics of
fuel prices
As consumers we would like the fuel prices to remain low unmindful of the international crude price touching the roof. The consumer is least interested in the fact that the country has inadequate oil reserves. No matter how much the oil marketing PSUs bleed, we, the consumers, want fuel at affordable prices. The question is to what extent and how much can the government subsidise the fuel prices? After all, there is a social cost of the huge oil subsidy bill, which may reflect itself in the form of a larger fiscal deficit, which itself is inflationary. The government may have to squeeze the flow of funds to critical infrastructure development and ambitious schemes like Bharat Nirman and the Rural Employment Guarantee Programme.
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There is yet another justification for the economic pricing of petroleum products, which is to keep the fuel demand in check. The larger the gap between the economic and subsidised prices, the higher the wasteful use. The economic pricing of fuel has another peril in the form of inflationary impact. Any hike in the fuel price, especially diesel, is likely to further fuel the fire of inflation. It is a daunting task before the government to raise fuel prices without risking higher inflation. Of course, some insulation from the price rise may be given to the public through the duty reduction on petroleum products. I would suggest that instead of the ad valorem duties which are price based, the government should impose specific duties on petroleum products which are price neutral. The complexity of fuel prices extends from economics to politics. The government is generally hesitant to raise fuel prices because of the fear of a public backlash and the Opposition is always ready to make political capital out of any hike. Though officially dismantled in April1, 2002, the administered price mechanism has continued and a decision on fuel prices remains a political issue. RAMA KASHYAP, MCM DAV College, Chanidgarh PU’s fund crunch Having served this university for decades since the days of its rehabilitation after partition, most members of the Panjab University Panckhula Residents Association have superannuated. Most of us have seen this university grow for a scratch after Lahore was lost in partition. Our association with this university is so long that we fail to accept the kind of financial crunch this university is made to suffer in the absence of Central status. A university which was one of the first few to be opened during British rule, a university that has been a premier citadel of quality research and teaching and a university that has attracted faculty from all over the country can no longer be allowed to suffer the financial crisis of the kind that has come to be associated with its existing status. This might prove to be suicidal not only for the institution but also for academics of the region. R. C.
CHANDNA,
II As a former teacher of Panjab University, I express my full support and solidarity with the faculty, students and officers’ campaign over the last several weeks for the university’s recognition as a Central university. If granted, such status would reinforce its role in teaching, research and creating national awareness. It would also let the university get over its serious resource crunch that it is facing in the scenario of rising costs of higher education. Panjab University has to hold its high academic standing that it has held for more than a century. I appeal to all votaries of
Punjabiat, who constitute the state’s elite, kindly don’t kill Panjab University by denying it resources, that it can get only as and when the Centre underwrites its costs. DHARMENDRA
GOEL,
It’s shocking The news “Punjab Vat Tribunal No 2 put on notice” (May
31) has stunned the judicial fraternity. The news vindicates the ongoing debate on corruption in high places. It also proves how public servants indulge in open corruption without fear. The resignation from the membership of the tribunal is not enough. It amounts to the return of the booty by the thief when caught. All justice-loving people should endeavor to take the case to its logical conclusion. K. SHARMA,
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