The curse of cheap diesel
yashwant sinha's maiden budget promises to leave us breathless, but not out of admiration. At best a weak attempt at financial jugglery, with its reliance on stiff indirect taxes, and consequent high prices, the budget looks like a huge leap backwards into the seventies. Worse, like then, Sinha's finance document treats environment protection as a virtual non-issue, though low-decibel tokenistic noises have been made. To make matters worse, the budget threatens through fiscal interventions to destroy even the quality of air in India's towns and cities.
The bjp- led government has not dared to stray from the beaten path. Our politicians have always kept the well-to-do farmer happy by raining on him numerous subsidies and sparing him tax on his agricultural income.
Perhaps the most haunting aspect of these subsidies is low-priced diesel to work rural pumpsets on which irrigation for rich farmers quite crucially depends in large parts of India.
This budget leaves diesel untouched but raises petrol prices, with the most likely consequence of the overall dieselisation of the economy.The irony is that while the political rationale for not fiddling with diesel prices is the concern for the "poor Indian farmer', the environmental impact of relatively cheap diesel is felt by those who live in India's grimy and progressively more polluted towns and cities, particularly the urban poor, who are especially mired in filth and pollution. And it is in cities that the switch-over from petrol to diesel occurs most conspicuously.
It is well known that the Indian automobile industry is well-poised to take advantage of the price difference between petrol and diesel. Almost every automobile major