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As Milk Prices Go Up, Bihar Links Hike To New Tax Regime, Diesel Prices

PATNA:  Even before Nitish Kumar returned to the NDA last month, the Bihar Chief Minister had been supportive of the BJP-led national coalition’s decisions like the Goods and Services Tax, or GST, and deregulation of diesel prices. But that didn’t stop his government on Thursday from holding the new tax regime and higher diesel prices responsible for a hike in price of milk.

A state government-backed milk cooperative that has its footprint in Bihar and Jharkhand raised the price of milk from Re 1.6 to Rs 3 for every litre, depending on the fat content. Bihar State Milk Co-Operative Federation Ltd, or COMFED, attributed the hike to higher packaging cost due to the new tax regime and an unprecedented hike in price of diesel in the state.

The announcement has exposed the BJP-JD (U) alliance government to barbs from Nitish Kumar’s former ally, the Rashtriya Janata Party for the hike just ahead of the festive season.

For one, because the central government had declared milk was one of the many items that would become  cheaper after the new unified tax regime was rolled out. It had estimated milk prices could fall by up to 5 per cent.

GST replaced over a dozen central and state levies including excise duty and service tax and has been described as the biggest indirect tax reform since independence.

Chief Minister Nitish Kumar’s support for the tax reform had predates his party’s renewed alliance with the BJP and had planned to fly to Delhi for the midnight launch of the new tax regime at parliament’s central hall. He later decided to depute a senior minister instead.

His first, surprise support for PM Modi’s initiatives was the notes ban, which was seen as the first sign of a rift within the grand alliance with the Congress and Lalu Yadav’s RJD that won the 2015 Bihar elections.

This month, he said the Prime Minister’s pushing of simultaneous state and general elections was sagacious and sided with the centre again on the high prices of petrol and diesel.

“Prices of petrol and diesel would continue to go up and down and their rate varies every day,” Mr Kumar told reporters on the sidelines of the weekly ‘Lok Samvad’ (interaction with the public) programme.

Thursday’s decision by the Bihar government’s profit-making venture, however, appeared to have led to some red faces in the government.

According to news agency Indo-Asian News Service, the price of milk sold under the cooperative’s Sudha brand has been fixed at Rs 41 and Rs 48 for a litre.

“At a time when common people are struggling, increase of milk price by Rs 3 is bad news for us,” said Saket Kumar, a businessman, according to the news agency.

Bihar Government tried to justify the hike. Pasupathi kumar Paras, Animal Husbandry Minister, said it would offset losses of the milk producers and ultimately, benefit them.