common sense

Why is Modi not ready to reduce the petrol price in India in 2018? Tax revenue of the Government is a zero-sum game. If you reduce taxes on petrol and diesel, then you have to increase some other taxes to keep the total tax revenue at the same level. Otherwise, if the total tax revenue decreases, then you have to reduce the Government spending on defence, infrastructure, welfare measures, etc., because you cannot reduce spending on items such as salaries, pension, interest payments, etc. So, the choices are limited. Do you want to reduce Government spending on defence, education, health, infrastructure, welfare schemes, etc.? I don’t think we can afford that. So, if Government expenditure cannot be reduced, then you cannot reduce the total tax revenues. The Government cannot grow money on trees. It has to collect money from public by way of taxes or it can raise money through loans or by selling its assets (such as disinvestment in PSUs). Government cannot thus reduce taxes on ...