The annual visitation known as the Union Budget has once again struck the nation and the people are writhing in its gruesome grip. It is sure to maim many and murder many others. The Lok Sabha will expend some empty rhetoric and set its seal of approval on the budget proposals, perhaps after some token “concessions” by the finance minister in his generosity towards his countrymen. But it will still be one more turn of the screw on the Indian citizen who has suffered so much stoically in the last three decades since Independence.
Successive finance ministers of the central government have assiduously fostered the notion that bleeding the rich is a legitimate part of their ministerial duties. The poor have always been led to believe that their turn would not come. But a tax-maniac government, such as ours, is like a man-eater. Everyone is just prey. The fact is, the weaker are gobbled earlier and easier.
Of all the levies concocted by the ruling parties of the day, nothing is more obnoxious than that hidden tax which the citizen, rich or poor, pays every day—the excise duty. Its extent and scope is so wide that nothing arrives on the shop counter from which the government has not extracted its unearned profit. Like an invisible monster, the government looms behind every transaction to collect its ransom.
And there are no ethics to inhibit the grabbing arm of the government. It can call a thing “luxury” and take, by way of Excise, Octroi and Sales Tax, more than what the producer earns by staking his capital and investing his labour. In fact, like an audacious highwayman, government can change the rules of the game at will and call anything a “luxury”.
From 28 February, toothpaste and toothbrush will live cheek by jowl with the fridge and car in luxury-land. Let not the “Neem stalk” chuckle, for we have many more finance ministers to follow Charan Singh, who may decide oral hygiene is an urban vulgarity and a luxury.
The most favourite target is petrol. That commodity which propels the urban rich in their pursuit of idle pleasure. The result is that both the motorist and the automobile industry are lying prone at the feet of our government.
‘Motorist’ is a dirty word, as I learned the other day. The Indian Liberal Group had called a meeting of the representatives of the Consumer Guidance Society, the Western India Automobile Association, the Taxi Men’s Union, the Goods Vehicle Operators’ Union and other concerned interests. That was in January before the Budget was presented. The idea was to see if some consumer action could be initiated to forestall any likely price increase in petroleum products and to promote consumer resistance in case prices were increased.
I have never suffered from a sin complex for owning a car, which for me is a workhorse—a means of increasing my mobility and productivity. But others in the meeting, more knowledgeable than I in the ways of the government, advised that to espouse the cause of the motorist was the surest way of alienating the government’s sympathies; that the only chance of the government looking at our appeal was to give a wide berth to the motorist and talk generally about the inflationary effect of any further increase in the price of petrol.
And so it was done. The finance minister, however, took no notice of the memorandum of the Consumer Guidance Society of India and up went the price of petrol by about 15 per cent from 28 February.
Petrol is the outstanding example of the limitless rapacity of our government. Perhaps with the solitary exception of alcohol, petrol is the highest taxed commodity in our country. Aware that the level of taxation is already too high, the government has not hesitated to make false claims to justify an increase in the levy on an item that was too irresistible to be overlooked as a source of tax revenue.
On 25 December, the Indian Express carried a government-inspired news item claiming “that the prices charged for domestic consumers of petroleum products are low by international standards”.
“The tax levied on normal petrol is the highest—around 400 per cent—and the retail price is also the highest in terms of the real income of the average wage earner in India.”
The same news item in the Indian Express added: “In official circles, the general feeling is that the full impact of the increased import costs should be passed on to the consumer. The import cost has now risen by 10 per cent due to the OPEC price hike, the supply cost of refined petroleum products would go up by nearly 20 per cent.”
This again is false. In the US., for instance, the OPEC escalation translates into an increase of only 1¼ US cents per gallon of petrol and the cost of production in India, by comparison, can only be a fraction of the US production costs.
The government also found the occasion convenient to assume a conservationist posture and to say that this is the opportune moment for the Indian public to be educated on the imperative need to bring down the level of oil consumption. This is like educating a starving man on the virtues of a weekly fast.
The per capita consumption of petroleum products in India is already one of the lowest in the world. To argue that a price increase is meant to curb consumption is a thinly disguised excuse for doing what is otherwise so unjustified.
In 1973, when the OPEC countries sprang on the world a three-fold increase in crude prices, the increase in petrol price posted by most developed countries, where the chief means of locomotion is the automobile, was only a fraction of the previous price. I was then in West Germany, where the petrol price was increased from DM 0.93 to DM 1.00 per litre. There was such a howl of protest that the German government promptly absorbed the increase.
Here, in India, the price of petrol was increased by more than Rs 2 per litre, nearly double the then prevailing price which was around Rs. 1.25 per litre. The increase by way of excise duty went entirely into the cavernous coffers of the government of India. The government of the day was not able, despite assurances to the contrary, to stem the tide of inflation any more than King Canute was successful in stopping the waves. Our economy still has the rankling sores caused by that inflation.
It is difficult to accept the assurance from the government that this time prices will behave differently. Taxi fares have already gone up, so will the freight rates of road transport which carries a good bit of our daily necessities like grains, cereals, milk and vegetables, to mention a few.
The deliberate lie being spread by the government that the petrol price increase will affect only the affluent section needs to be exposed. I would not be far from the truth in asserting that the majority of cars on our roads are run on the expense account of company executives, businessmen or government officials, none of whom pays for his own petrol. There are very few private motorists in the strict sense of the word, i.e., those who own and operate automobiles from their wage or salary earnings.
I would dearly love to see our ministers crawling up the Raj Path to the North Block on that contraption called “Moped”, on which our finance minister has lavished his sympathies. That will be a lesson they can set for others on conservation (if not on pollution) and simplicity.
But mopeds are meant for others. Ministers are meant for motor cars. At least in India, that is Bharat.
This piece is part of a series from the Indian Liberals archive, a project of the Centre for Civil Society. , which was published in January 1979. The original version can be accessed at this link. This essay is excerpted from the booklet Freedom First with the title “Mopeds Are For Others” which was published in April 1979. The original version can be accessed here.