To Bear High Fuel Price

 Petrol and diesel prices are spiralling out of control. But now when international crude oil prices are rising and the rupee is falling, consumers have to bear the burden. But as fuel prices continue to pinch consumers, the question remains — Have we done enough to tackle the crisis?Petrol and diesel prices are on a fire again, hitting farmers, transporters, fishermen, consumers and commuters. In all, duty on petrol was hiked by Rs 11.Excise duty on petrol China single screw barrel Factory is currently at Rs 19. India meets over 80 per cent of it’s fuel demand through imports so prices are largely dependent on external factors and taxes by Centre and state governments.It seems consumers will have to bear high fuel prices until political pressure forces governments to reduce taxes on fuel, work out some alternative mechanism for oil prices or external factors improve.47 a litre. Besides, finance ministry officials thinks that while a Rs 2-3 cut in tax may not provide a large benefit to general public, it will have an adverse impact on revenue. The current spurt in fuel prices is due to two factors: free fall in Indian rupee’s value in the international currency market and the volatility in international prices of crude. Delhi charges a VAT of 27 per cent on petrol and 17. The total tax incidence on petrol comes to 45-50 per cent and on diesel, it is around 35-40 per cent.

States, especially Kerala, pointed out that with everything being brought under GST, states’ options to raise resources have come down. In initial years of the Modi government, the crude prices had fallen to below $40 a barrel against high of $120 per barrel witnessed during UPA 2. So consumers in India did not really benefit from lower global prices.24 per cent on diesel. They said that products that are outside GST’s purview should remain so. the government seems to be looking away and pointing towards global issues. Opposition parties have also announced nation-wide strikes and protests over the record-high fuel prices. Besides, the states also impose high rate of taxes on fuel that vary from one state to another.48 per litre and on diesel by Rs 15. However, states are reluctant to let go of their right to tax petrol and diesel. In its earlier years, the Narendra Modi government benefited from a low global crude oil prices due to excess crude inventory world-wide. Crude oil prices were hovering around $76. Due to geopolitical factors international crude oil prices are also volatile. This week the rupee fell to a new low of 71 against US dollar.77 per litre and that on diesel by Rs 13. 

US sanctions against Iran, the third biggest exporter of oil to India, make it difficult for its allies like India to manage the oil demand supply. So, every time there is an increase in crude prices public sector oil marketing companies pass on the hike in to consumers, on a daily basis.16 a barrel on Friday. However, in October 2017, the Centre had reduced basic excise duty on petrol and diesel by just Rs 2 per litre.Since the UPA-2 days, oil producing countries have tried to bring down their production to jack up crude oil prices and geopolitical tension has made things worse.India deregulated the price of petrol in 2010 and that of diesel in 2014, ending government’s control over fuel prices that are now decided depending upon the price of crude oil in international market. 

However, when crude oil prices were falling the Modi government started hiking taxes on petrol and diesel to increase its tax kitty.12 per cent on petrol, while Telangana levies the highest VAT of 26 per cent on diesel. Taxes from GST have not been as per expectation and shortfall in taxes could hit government’s fiscal deficit target of 3.3 per cent of the GDP. Between November 2014 and January 2016, Centre had raised excise duty on petrol and diesel on nine occasions to take away most gains arising from plummeting international oil prices. Mumbai has the highest VAT of 39.However, the Centre currently does not want to reduce taxes on fuel as this might hit its revenue.With Assembly elections scheduled in four important states including Madhya Pradesh and Rajasthan soon, the Centre is under pressure to intervene and offer relief to people.Oil minister Dharmendra Pradhan has suggested bringing petrol and diesel under GST to bring down taxes on diesel and petrol to give relief to consumers.