'Economist' Amar Singh can solve inflation woes

AMAR SINGH'S ECONOMICS: Amar Singh wants 50 pc tax imposed on profits of both oil producers and refiners.

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Keywords: Chidambaram, Manmohan Singh

New Delhi: It's just been a few days to his newfound clout and already Samajwadi Party General Secretary, Amar Singh is prescribing monetary policy. He has a solution to the problem of inflation that is elegant in its very simplicity.

In a letter to the Prime Minister, he says it is the prerogative of the Finance Minister, not the Reserve Bank Governor, to fix the value of the rupee.

If the rate is brought down to Rs 39 to $1 from Rs 43 now, inflation could be reduced by two to four percentage points swiftly.

Amar Singh has not reckoned with the impact on labour intensive export sectors that employ the aam aadmi that the UPA professes to champion, but that is another story.

As a quick revenue raising measure, Amar Singh wants a tax of 50 per cent imposed on the profits of both oil producers and refiners. This, he ways would instantly generate Rs 1,00,000 crore in revenue, and help pay for subsidies on auto and cooking fuels.

Without mentioning Mukesh Ambani's reliance industries, Amar Singh accuses the Petroleum Minister, Murlli Deora of batting for a well-known private operator, which also operates the sole refinery that enjoys tax free status.

This refinery earns windfall profits, exporting petro products that have been exempted from a ban on exports imposed on other sectors like cement. The tax free export status has inflicted a loss of Rs 1,500 crore, he says, on Indian Oil Corporation and Rs 3,000 crore on Gujarat.

He wants the Government to prove its aam aadmi credentials by withdrawing the concession. That would also be proof that the Government is not partial to industrialists. Coming from Amar Singh that is a bit rich.