Modi Is Repeating Vajpayee’s Mistake On Oil Deregulation: Petro-Populism Does Not Work


Modi Is Repeating Vajpayee’s Mistake On Oil Deregulation: Petro-Populism Does Not Work

Is National Democratic Alliance – 2 (NDA-2) under Narendra Modi repeating the mistakes of NDA-1 under Atal Bihari Vajpayee in the oil sector?

Sharp cuts in petrol and diesel taxes were announced last Friday (5 October), wherein central excise was cut by Rs 1.50 a litre, oil marketing companies asked to absorb another Re 1 in rising costs, and BJP-ruled states providing matching cuts in their own taxes, thus bringing down prices by upto Rs 5 a litre – at least temporarily.

Quite apart from the reality that this cut may soon be neutralised if oil prices rise further (as seems likely), the policy of cutting rates is bad in principle for it essentially marks a step backwards from one of the most sensible policies adopted by the Modi government: deregulation of petro-fuel prices.

The Vajpayee government announced total deregulation of fuel prices in 2003-04, but months before the elections, it rolled the decision back “temporarily”. Read More

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