Why BJP Is Silent On Fuel Price Hike

• The VAT cut in ­poll-bound Rajasthan will make petrol and diesel cheaper by Rs 2.50 per litre

• But it will cost the state exchequer about Rs 2,000 crore in ­revenues, nixing a plan to keep the fiscal ­deficit down

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Behind the bluster of Prime Minister Narendra Modi바카라�s new slogan of invincibility and resoluteness, 바카라�Ajay Bharat, Atal Bhajpa바카라�바카라�proclaimed at the BJP바카라�s national executive meeting last weekend바카라�lay the ruling party바카라�s calculated decision to keep silent on the fuel price hike. While the opposition took to the streets, organising a Bharat Bandh on the issue, the BJP decided to keep things low key.  There was no mention of spiralling fuel pri­ces and the weakening rupee바카라�issues that had brought most opposition leaders onto the same platform once again. Though the government tried to play down the bandh by a 바카라�disruptive opposition바카라�, BJP sources say the party is definitely aware of the possible ­political fallout of rising fuel prices.

Outlook spoke to several BJP leaders to find out the strategy behind keeping a low profile when an all-out political war has broken out over the emotive issue. 바카라�The Centre can do little at this juncture. It is in no position to reduce excise duty on petrol and diesel in the immediate future. Taxes on petrol and diesel contribute a huge chunk to the government바카라�s revenue. In 2017바카라�18, the Centre had mopped up Rs 2.29 lakh crore from the excise duty on petroleum products. Funds are needed to implement crucial social schemes that the PM has announced, and there is no scope for any cut as of now. So it has been decided to let the states handle the issue as they think fit,바카라� discloses a senior BJP leader.

The Centre gave the ­go-ahead to poll-bound Rajasthan바카라�s chief minister Vasundhara Raje to cut VAT on petrol and diesel by four per cent. 바카라�Con­sid­e­r­ing the fiscal situation of the state, it is not a very prudent move by the CM. However, with the assembly elections around the corner, she cannot take a chance. The party is anyway on a sticky wicket in the state,바카라� the leader explains. The VAT cut in Rajasthan will make petrol and diesel cheaper by Rs 2.50 per litre, but will cost the state exchequer an estimated Rs 2,000 crore in revenues. Rajasthan had a fiscal deficit of 3.5 per cent in 2017바카라�18, and it had planned to keep it down to three per cent in 2018바카라�19.

바카라�That doesn바카라�t seem possible now. Vasundhara is any­way in a populist poll mode. She has given cell phones to all Bham­ashah cardholders [a sch­eme to transfer benefits dir­ectly to women recipients], and doled out interest-free loans to small-time artisans. The eco­nomy doesn바카라�t seem to be her primary concern right now,바카라� says another BJP leader.

After Rajasthan cut VAT, Andhra Pradesh chief minister Chandrababu Naidu followed suit by announcing a cut of Rs 2 per litre. Naidu admits that this will add a burden of Rs 1,120 crore to the state exchequer, already affected by a 3.4 per cent fiscal deficit. However, he is willing to go down the populist route to keep the electorate happy, and is also looking at taking on the TRS in Telangana along with the Congress and the Left.

West Bengal바카라�s Mamata Banerjee, meanwhile, reduced levies on petrol and diesel by Re 1 a litre바카라�while claiming that the state was repaying a Rs 48,000-crore loan annually. She charged the Centre with complete economic mismanagement and demanded that central cess be immediately withdrawn. Her finance minister Amit Mitra says the Centre should have set-up a fuel price stabilisation fund with the cess that it is collecting. 바카라�The Centre raised excise nine times in four years to shore up its finances even when the global oil prices were down,바카라� he tells Outlook. According to him, when crude prices are low, the cess should be used to create a fund that can be used to stabilise prices later when crude prices go up. The government failed, and INS­tead kept increasing prices even when crude prices were low, and did not transfer the benefit to consumers, he says.

In fact, the only time the Centre red­uced excise duty by Rs 2 a litre was in October 2017, in the run-up to assembly elections in Gujarat and Himachal Pradesh. 바카라�Maybe the Centre will go in for a cut as elections come closer. As of now, the social schemes aimed at the poor need to be financed,바카라� says a senior pet­roleum ministry official.

Petroleum minister Dharmendra Pradhan, meanwhile, could not be contacted. BJP sources confirm that he is under pressure from the party to find some way by which some relief can be given to the common man. Party ­pre­sident Amit Shah called him for a meeting on September 10 to discuss the issue. 바카라�The party is definitely concerned about the issue with Lok Sabha polls not very far off.  The middle class바카라�s anger cannot be ­ignored. It is a very precarious situation for the government,바카라� says a party general secretary.

The BJP has reached out to its allies to help handle the situation on the ground, and not go public with their discontent. This came after UP minister and chief of the BJP-allied Suheldev Bharatiya Samaj Party (SBSP), Om Prakash Rajbhar, publicly warned the ruling party that the country has a history of governments falling because of price rises. 바카라�In our country, there is a history of governments falling due to price rise. The people of the country have the real power. Whenever there is rise in petrol or diesel prices, the party in power has to suffer as this affects traders, youths, farmers and the poor,바카라� Rajbhar tweeted.

Sources in the BJP and government claim they are working out some mechanism which is likely to be put in place in the near future. Law minister Ravi Shankar Prasad says the rise in fuel prices is momentary and blames OPEC for the surge in international prices of crude. 바카라�We are standing with the people in their concern, but the solution to this problem is not in our hands,바카라� he says, citing problems all over the world. 바카라�There is political instability in Venezuela. There are US sanctions on Iran. Oil production in the US has decreased...We have to depend on imports for oil,바카라� Prasad told media persons after the opp­osition바카라�s Bharat Bandh. When asked whether the government was planning to bring petroleum products under GST, Prasad said the Centre could not take the decision unilaterally and the states had to be on board. Amit Mitra reminds the government that 바카라�most of the finance ministers are from the BJP.바카라� What is stopping Dharmendra Pradhan from telling his party finance ministers in states to come on board, he asks.