BENGAL POLITICS: State prefers bandh to offering fuel tax relief – Shutdown costs Bengal Rs 970 crore, double of 5 per cent levy cut

BENGAL POLITICS: State prefers bandh to offering fuel tax relief – Shutdown costs Bengal Rs 970 crore, double of 5 per cent levy cut – national economics not its concern, but rather a preservation of power and wrong policies ?!!

Bengal's Left Front wants to sacrifice everything including its own CM in its bid to retain power - a sure short-circuit mechanism for a much needed poll debacle, soon to come ?!!


Calcutta, July 4: The Left has two prescriptions for bringing relief to the common man — one for Delhi and a different one for Calcutta.

It wants the Centre to sacrifice a part of its revenues by slashing tax on petroleum products to bring down fuel prices. But in Bengal, its own government prefers to inflict a shutdown on the common man instead of providing tax relief on petrol and diesel.

If the Bengal government lowers sales tax on the two fuels by five percentage points, it will lose around Rs 460 crore in revenues. The nation-wide 12-hour shutdown the Left has called on July 5 will cost Bengal’s economy more than double that amount — around Rs 970 crore. (See chart)

The general strike is meant to protest the Centre’s decision to raise the prices of petrol, diesel, kerosene and cooking gas and to deregulate the market. Unlike in most other states, the Left will not find it difficult to enforce a total shutdown in Bengal.

“The Left parties want the Centre to slash the taxes and duties on petroleum products (but) the Left government in Bengal can do the same and give relief to the people,” said an academic who teaches economics at a leading Calcutta college.

The Bengal government levies a 25 per cent sales tax on petrol and a 17 per cent sales tax on diesel. Besides, it has been collecting a Re 1 cess from every litre of petrol and diesel sold in the state for the past 15 years to generate the money to build bridges, flyovers and highways.

Based on last week’s revised fuel prices, these levies will bring the state Rs 1,950 crore in revenues: Rs 550 crore from the petrol tax, Rs 1,150 crore from the diesel tax and Rs 250 crore from the cess.

The price revision, however, has raised petrol and diesel prices in Calcutta by Rs 3.65 and Rs 1.95, respectively.

What if the state slashed the fuel sales tax by five percentage points (from 25 to 20 per cent for petrol and from 17 to 12 per cent for diesel)?

The retail price of petrol would then fall by more than Rs 2 and the price of diesel by nearly Rs 1.75, state finance department sources told The Telegraph. They added that the Rs 460 crore such a move would cost the state was less than 5 per cent of the Bengal government’s total annual sales tax collection of Rs 10,500 crore.

How much would the shutdown cost the state’s economy? The figure can be arrived at by dividing Bengal’s net state domestic product — the value of goods and services produced in a year — by 365.

Measured in current prices, the gross state domestic product of Bengal for 2009-10 was Rs 3,53,967.15 crore. Divided by 365, this comes to Rs 969.77 crore — about Rs 510 crore more than what the state government would have sacrificed by cutting sales tax.

“A strike could have been avoided had the government decided to forgo Rs 460 crore,” a senior state government official said.

However, with food inflation at 17 per cent and general inflation entering double digits, the fuel price hike has given the embattled Left an issue to target the Congress in Delhi and its ally Trinamul Congress in Bengal.

State finance minister Asim Dasgupta was amazed at the suggestion that the state exchequer take a hit by slashing fuel sales taxes.

“This is a weird argument. How is it possible that the Centre will increase fuel prices and the state will cushion the impact by reducing sales taxes? That will put a strain on our development expenditure,” he said.

Dasgupta, who is chairman of the empowered committee of state finance ministers, said the panel had decided that any proposal to reduce sales tax on petrol and diesel at the state level would be adopted only after a consensus among its members.

“The retail prices of petrol and diesel in Bengal are lower than those in Maharashtra, Andhra Pradesh, Tamil Nadu and Rajasthan. So why blame us? It’s the Centre’s duty to provide subsidy on items that are on the Union list. So train your guns at the Union government,” Dasgupta said.

Buddha walk makes waves – Buzz about unhappiness over strike – not in touch with the mood of the nation, but powerless with empty gestures only to short-circuit own party on disunity  ?!!

Buddhadeb - now a headache on the Left side, disillusioned and demoralised ?!!


New Delhi, July 4: Buddhadeb Bhattacharjee today quietly walked out of his party’s politburo meeting that exempted Left-ruled Tripura from tomorrow’s strike but not Bengal, sparking speculation he was unhappy with central CPM leaders.

Although politburo members attributed his early departure to an appointment, Bengal government officials said the chief minister had no engagement apart from the party meeting.

“The chief minister left by the evening flight after attending the politburo meeting. He had no other meeting,” Bengal resident commissioner Bhaskar Khulbe said.

Bhattacharjee left the meeting venue, the party’s headquarters at AKG Bhavan, around 12.45pm and remained closeted at Banga Bhavan till he emerged to catch the 5pm flight to Calcutta.

Other politburo members came out of the meeting at least an hour after he left.

Senior leaders Sitaram Yechury and M.K. Pandhe said: “He left because he had an appointment. There was no other issue.”

Bhattacharjee, who is known for his dislike of bandhs, was unhappy that the central leadership had exempted only Tripura, among the three Left-ruled states, on the ground that the state had recently had a strike to protest against the petroleum price increase.

So had Bengal, which observed a transport strike on June 26 in response to a Left strike call, people close to Bhattacharjee said.

Tripura chief minister Manik Sircar had sought the exemption, a plea the leadership accepted, sources said. “Protest marches would be organised in Tripura but there will be no strike,” Yechury had said yesterday.

Sources close to Bhattacharjee said that with Mamata Banerjee trying to project herself as a politician opposed to strikes, for which there is often little popular support, ahead of the Assembly polls next year, the shutdown call could go against the party.

In any case, the chief minister has opposed strikes in the past. Two years ago, he had said: “I think it (strike) is not helping us, our country. But unfortunately, as I belong to a party and (when) it calls a strike, I keep mum.”

Buffeted by embarrassing losses in the civic and Lok Sabha polls, Bhattacharjee is also unhappy with the aggressive anti-Congress line being pursued by the central leadership. Leaders close to him have voiced concern over the party being seen as “coordinating” with the BJP by calling a strike on the same day.

Bengal CPM leaders feel it could send a wrong message to Muslims. “Why have we given a strike call on the same day as the BJP,” asked one.

The discomfort in the Bengal camp would have escalated when senior BJP leader L.K. Advani today flaunted the Opposition unity on the strike. “This may be the first time in the history of India’s politics that almost all political parties will participate in the Bharat bandh,” Advani said.

Advani thanked NDA convener and JD(U) leader Sharad Yadav for bringing together even non-NDA parties. Although the CPM has said it is not acting with the BJP, it is no secret that Sharad has been in touch with Left leaders to make the strike a success.

After coordination between the BJP and the Left in Parliament in the budget session, it will be seen on the streets tomorrow.


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