Rising inflation is the biggest challenge, to bring it under control, tax cut on petrol and diesel is necessary: Arun Kumar
Professor Arun Kumar said that at this time inflation is the biggest challenge in front of the country’s economy. Due to this the spending capacity of the people has decreased. In such a situation, the government should bring inflation under control by cutting tax on petrol and diesel.
growing in the country Dearness ,inflation) remains a cause for concern. According to experts, due to high inflation, the purchasing power of common people (Purchasing Power) is affected. This leads to a decrease in demand, economic growth (economic growth rate) softens and employment generation and other economic activities are also affected. The news agency PTI asked five questions to Arun Kumar, former professor of Jawaharlal Nehru University (JNU) and currently the Chair of the Institute of Social Sciences, on various aspects including the causes, effects and measures to deal with inflation. Of. He said that it is necessary to control inflation. The tax in the form of excise duty and VAT (Value Added Tax) on petroleum products is close to Rs 35 to 40 per liter. If it is reduced then the prices can be controlled to a great extent.
question: Inflation is increasing day by day, with the deteriorating budget of people’s household, the economy will also be affected in the coming times. Is it only global reasons responsible for this?
answer : Both internal and global factors are responsible for the rise in inflation in the Indian economy. Ukraine had problems even before the war. Demand increased, but there were supply constraints. There was a problem with the container. Chip is in trouble. The prices of crude oil increased in the global markets, but at the same time the excise duty on petroleum products in the country also remained high. This has led to a rise in fuel prices. Petroleum products are the main raw material and when fuel prices are high, other products are expensive. Due to increase in the price of petrol, diesel, transportation cost increased, pesticide became expensive and food prices went up even though there was no supply problem.
Second, domestic companies are focusing on increasing their profits. According to the data of 1500 companies of Reserve Bank of India, their profit has increased by 26 percent. Seeing the environment, companies are increasing the price more than the cost. Due to the impact of the unorganized sector during the epidemic, companies are focusing more on earning profits by increasing the prices even as demand comes in the organized sector. Apart from this, the rise in the price of imported goods is also the reason for high inflation.
question : Do the inflation figures in the country reflect the actual inflation situation?
answer: Inflation remains high. Especially the Wholesale Price Index based inflation is more than 10 per cent (13.11 per cent in March 2022) for the last 11 months. Wholesale inflation has increased even when demand is low. And when wholesale inflation rises, the consumer price index based retail inflation rate also gets affected. However, inflation figures do not reflect actual inflation. Services are not included in wholesale inflation. That is, when the prices of services increase, they do not come under wholesale inflation. In the Consumer Price Index also, the weight of the services sector is only about 30 percent, while the contribution of this sector in the economy is about 55 percent.
Health spending increased during the pandemic. Similarly, expenditure on laptops, internet, etc. increased in the education sector, but all this does not fully account for retail inflation. According to the data, retail inflation is at 6 per cent (6.07 per cent in February 2022), but I believe it is much higher. It is affecting the poor.
Question: What are the options with the government to give relief to the people from rising inflation? Is there scope for reduction in excise duty?
answer : When the prices of crude oil are increasing in the global market, then the government first needs to reduce the excise duty on petroleum products. The tax in the form of excise duty and VAT (Value Added Tax) on petroleum products is close to Rs 35 to 40 per liter. If it is reduced, then the prices can be controlled to a great extent. The tax revenue collection of the government is good at this time. GST collection is at record level (Rs 1.42 lakh crore in March 2022). Direct tax collection has also reached more than Rs 14 lakh crore in the financial year 2021-22. On the other hand, our consumption has not reached 2019 levels. In such a situation, if the government wants, it can cut excise duty. This will reduce inflationary pressure. As a result, demand will increase, employment will increase and ultimately economic growth will be faster.
Apart from this, GST also needs to be rationalized in certain categories. On the other hand, the government, if it so desires, can impose taxes on those whose wealth has increased significantly in recent years to increase tax revenue. Under this, direct tax collection can be increased by increasing taxes like corporate tax, property tax. This can offset the reduction in excise duty.
Question: But the government says that it uses the amount received from the tax imposed on petroleum products in welfare schemes.
answer : It is wrong to say this. You have a record tax collection. You can invest the money received from other items in welfare schemes. You have to prioritize. Inflation affects the poor.
Question: Can measures like putting money directly into the accounts of people like Kisan Samman Nidhi can be taken to give relief from inflation?
answer : I believe that if there is money, it should be used to create employment opportunities. Direct Benefit Transfer (DBT) does not give respect to the people. People get respect by working. People had food problem during the pandemic, at that time it was appropriate to do it, but instead of DBT in normal days, measures need to be taken to give jobs to people.
Money should be given through expenditure on employment, education, health and infrastructure in rural areas. The World Bank has been talking about DBT since 2015, but I am not in favor of it. You give work opportunities and when people will get income, then they will spend according to their interest and this will give them a sense of respect.
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