The trust vote drama in Karnataka has hit the national headlines. The incumbent chief minister, B.S. Yeddyurappa appears to have won the first round. It remains to be seen how the BJP responds to the governor’s direction that a second trust vote be held by the 14th of this month. In the 225-member Karnataka assembly, the ruling BJP had a wafer-thin majority since the 2008 assembly elections. And it was not surprising to find that some political forces in the state felt that there was an opportunity to unseat the government. But what has transpired over the past few days has once again reminded citizens of the ugly side of politics. Leading up to the trust vote, the governor of Karnataka wrote a letter to the speaker of the Karnataka assembly asking that no MLAs be disqualified before the trust vote was conducted on the floor of the assembly. Subsequently, there have been a number of allegations about the conduct of the trust vote itself. The governor openly called the trust vote “farcical”, and wrote to the Centre asking that President’s Rule be imposed in the state, before he directed the government to prove its majority again. This phenomenon of trust votes is not uncommon in our dynamic political culture. Just before the 2009 general elections, the BJD and the BJP had differences over seat-sharing in Orissa. The BJP decided to withdraw support to the Naveen Patnaik government. The BJD passed the floor test by a voice vote. While the opposition claims that the process was not fair, the BJD leadership has maintained that there was no request for a division, which would have required recorded voting. The relatively small Goa assembly has seen a number of similar occurrences in the recent past, with governments changing as a result. But there are some critical issues that merit examination. In some recent trust votes, there have been allegations that large amounts of money have been exchanged. Of course, following the 2008 trust vote in the Lok Sabha on the India-US nuclear agreement, the infamous cash-for-votes scam broke out, with wads of cash being shown on the floor of the House. In the Karnataka trust vote, too, there have been allegations that large amounts of money have changed hands. The second issue is how some of these trust votes are managed on the floor of the House. Both the recent Orissa episode and the ongoing Karnataka one have been very contentious about the procedure that has been used to prove the majority. In both cases, the opposition alleged that they asked for a division, which would require a physical count of votes rather than just a voice vote, and in both cases a division was not held. A parallel issue which needs to be kept in mind is the governor’s power to ensure compliance with procedure in the state legislatures. The third issue that needs some discussion is whether the decision on defections should be judged by the speaker, usually a member of the ruling party or coalition, or by a neutral external body, such as the Election Commission. In the latest episode in Karnataka, the speaker has disqualified MLAs on the ground that they have voluntarily exited the party under which they were elected. In a 1994 case (Ravi S. Naik v. Union of India), the Supreme Court ruled that the words “voluntarily giving up membership” have a wider meaning. An inference can also be drawn from the conduct of the member that he has voluntarily given up the membership of his party. There is a huge paradox in the anti-defection law that was passed 25 years ago. While MLAs and MPs vote along party lines on ordinary legislation, they do not appear to be daunted by the consequences in the case of trust votes. So, in effect, the anti-defection law appears to be effective in controlling members of all parties on policy-making — which could in fact benefit from more open input from across party lines — but ineffective in several cases with regard to trust votes. Clearly, there is much more at stake for all concerned in trust votes, and therefore the scope for greater negotiation. Politics in our large and complex democracy is fiercely competitive. Dissidence is to be expected because there are too many people vying for too few of the top positions. While there are no perfect solutions, the only sustainable and meaningful approach is to encourage inner-party democracy so as to enable a selection process for positions of responsibility that is accepted as free and fair by all concerned. While the political uncertainty continues, the only certainty for India’s citizens is a very unhealthy politics for some time to come. - CV Madhukar This article was published in Indian Express on October 13, 2010
Over the last few days, the retail prices of petrol and diesel have touched an all-time high. In Delhi, petrol was selling at 74.6/litre on April 25, 2018, while diesel was at 66/litre.
Petroleum products are used as raw materials in various sectors and industries such as transport and petrochemicals. These products may also be used in factories to operate machinery or generators. Any fluctuation in the price of petrol and diesel impacts the production and transport costs of various items. When compared to other neighbouring countries, India has the highest prices for petrol and diesel.
Note: Prices as on April 1, 2018. Prices for India pertain to Delhi.
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.
How is the price of petrol and diesel fixed?
Historically, the price of petrol and diesel in India was regulated, i.e. the government was involved in the deciding the retail price. The government deregulated the pricing of petrol in 2010 and diesel in 2014. This allowed oil marketing companies to determine the price of these products, and revise them every fortnight.
Starting June 16, 2017, prices for petrol and diesel are revised on a daily basis. This was done to with the idea that daily revision will reduce the volatility in retail prices, and protect the consumer against sharp fluctuations. The break-up of retail prices of petrol and diesel in Delhi on April 25, 2018 can be found below. As seen in the table, over 50% of the retail price of petrol comprises central and states taxes and the dealer’s commission. In case of diesel, this amount is close to 40%.
Table 1: Break-up of petrol and diesel prices in Delhi (on April 25, 2018)
|
Component |
Petrol |
Diesel |
||
| Rs/litre | % of retail price | Rs/litre |
% of retail price |
|
| Price Charged to Dealers | 35.7 | 48% | 38.4 | 58% |
| Excise Duty (levied by centre) | 19.5 | 26% | 15.3 | 23% |
| Dealer Commission | 3.6 | 5% | 2.5 | 4% |
| VAT (levied by state) | 15.9 | 21% | 9.7 | 15% |
| Retail Price | 74.6 | 100% | 65.9 | 100% |
Does India produce enough petroleum to support domestic consumption?
India imports 84% of the petroleum products consumed in the country. This implies that any change in the global prices of crude oil has a significant impact on the domestic price of petroleum products. In 2000-01, net import of petroleum products constituted 75% of the total consumption in the country. This increased to 95% in 2016-17. The figure below shows the amount of petroleum products consumed in the country, and the share of imports.
Note: Production is the difference between the total consumption in the country and the net imports.
Sources: Petroleum Planning and Analysis Cell; PRS.
What has been the global trend in crude oil prices? How has this impacted prices in India?
Over the last five years, the global price of crude oil (Indian basket) has come down from USD 110 in January 2013 to USD 64 in March 2018, having touched a low of USD 28 in January 2016.
While there has been a 42% drop in the price of global crude over this five-period, the retail price of petrol in India has increased by 8%. During this period, the retail price of diesel increased by 33%. The two figures below show the trend in prices of global crude oil and retail price of petrol and diesel in India, over the last five years.
How has the excise duty on petrol and diesel changed over the last few years?
Under the Constitution, the central government has the powers to tax the production of petroleum products, while states have the power to tax their sale. Petroleum has been kept outside the purview of the Goods and Services Tax (GST), till the GST Council decides.
Over the years, the central government has used taxes to prevent sharp fluctuations in the retail price of diesel and petrol. In the past, when global crude oil prices have increased, duties have been cut. Since 2014, as global crude oil prices declined, excise duties have been increased.
Sources: Petroleum Planning and Analysis Cell; PRS.
As a consequence of the increase in duties, the central government’s revenue from excise on petrol and diesel increased annually at a rate of 46% between 2013-14 and 2016-17. During the same period, the total sales tax collections of states (from petrol and diesel) increased annually by 9%. The figure below shows the trend in overall collections of the central and state governments from petroleum (including receipts from taxes, royalties, and dividends).
Notes: Data includes tax collections (from cesses, royalties, customs duty, central excise duty, state sales tax, octroi, and entry tax, among others), dividends paid to the government, and profit on oil exploration.
Data sources: Petroleum and Planning Analysis Cell; Central Board of Excise and Customs; Indian Oil Corporation Limited; PRS.
