The government has reduced the basic excise duty on petrol and diesel by rupees 2 per litre as it looks to cushion the impact of rising crude prices. To understand more on the politics & economics of this move CNBC-TV18 spoke to Shekhar Gupta, Editor-in-Chief, The Print
On the economic side, it is first case of the government thinking under popular pressure because the government takes social media seriously. However, Gupta does not think they should have taken this step because its prudent policy to keep fossil fuel prices at high levels for and economy that imports it. The government has done this now but in case the oil prices go up again, will they again adjust the excise rates. A strong government should avoid such backward moves.
The government has done this now but in case the oil prices go up again, will they again adjust the excise rates. A strong government should avoid such backward moves.
When asked if fiscal stimulus would be a good option to bring back economy on track, Gupta says fiscal stimulus is like a steroid and should be given when the situation is really bad (case of life or death) but economy needs to be nursed back to good health, which can be done through quick reforms including – faster movement on public sector stake sale, faster move on banking reforms and bad loan settlement and whatever stimulus is needed can easily come in through rate cuts, government taking up useful projects on EPC basis etc.
The above step shows that the government has blinked, there were other instances when they blinked like pullback of Sebi circular on new debt norms just before October 3, when it was to come into effect.
So, if a strong government blinks then the opposition will know that the government is losing nerve and pressure will build up, believes Gupta.
For the entire discussion, watch video
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
