Talking about India, the price of petrol has crossed Rs 100 / liter in many states.
Petrol@100: Petrol and Diesel Prices are economically and politically sensitive in the country and the world. Talking about India, the price of petrol has crossed Rs 100 in many states. This is happening for the first time, when consumers have to spend hundred rupees for a liter of petrol. The change in oil prices in the international market definitely has an impact in the Indian market. Since January this year, the price of Brent Crude has increased by about 30 percent. During this time, petrol has become more expensive by Rs 6.17 per liter and diesel by Rs 6.4 per liter. It is important to know here that about 70 percent of the retail price of petrol and diesel is tax and cess. That is, petrol and diesel are a major source of income of the central and state governments. In the last 3 years, the central and state governments have earned about Rs 14 lakh crore from tax on petrol and diesel.
All the countries of the world including India are going through the process of unlocking and vaccination. In such a situation, as schools, colleges, offices, plants and other institutions will start opening in full numbers, the demand for petrol and diesel will also increase. And, it will directly affect the common man’s pocket. That is, inflation is likely to increase. As the Reserve Bank has also revised the target of retail inflation in its last monetary review. The RBI has estimated retail inflation to be 5.2 per cent in the fourth quarter. Now the important question is that now, with petrol crossing Rs 100 and diesel at Rs 90 per liter, will the government give relief to the common man from oil inflation? How much relief can the common man get immediately and in what conditions will it be possible? And why are the prices soaring?
Why is petrol and diesel getting expensive?
The famous energy expert of the country, Narendra Taneja, says about this, the increase in the prices of petrol and diesel are due to three main reasons. First, the prices of crude are continuously increasing. In the last two months, about 65 percent crude has become expensive. Secondly, work is stalled in many refineries of the world, due to which supply is being reduced. Third, the demand for petrol and diesel is more in the international market. Demand is usually high in winter. According to that supply is not being done.
Taneja also says that the tax on oil in the country is definitely at its record level. This includes excise and state VAT taken by the central government. States get about 41 percent of excise duty. Cess on petrol and diesel means the Central Government keeps it with itself. At the same time, VAT goes completely to the treasury of the state governments.
Also read… Crude oil is 40% cheaper under Modi rule, then why have to pay 100 rupees for 1 liter petrol?
Be aware, the rise in oil prices in the international market is also being seen by Saudi Arabia due to additional cuts in production of one million barrels per day during February and March. Saudi Arabia has promised additional cuts in production as part of an agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its partners, also known as OPEC +, and includes Russia. Due to this, the prices of crude have crossed $ 65 per barrel, which is the highest in a year.
Meanwhile, due to the corona epidemic, the figures of excise collection between lockdown and unlock should be considered. According to the Controller General of Accounts (CGA) data, the excise collection during April-November 2020 increased by 48 per cent to over Rs 1.96 lakh crore. Whereas, in April-November 2019, this figure was 1.32 lakh crore. Whereas, petrol sales during the period fell from 20.4 million tonnes to 17.7 million tonnes. At the same time, diesel was down from 5.54 million tonnes to 4.49 million tonnes.
How much reduction possible on petrol and diesel?
Narendra Taneja says, in the current situation, governments have limited options. One of the main reasons for this is the challenges of the Corona epidemic. The challenge before governments is to boost the economy. Despite this, we should not forget that when the crude was at $ 20 and the governments worked to increase revenue by increasing excise duty and VAT, the consumers supported. Now that the prices of petrol and diesel are at the record top, consumers are upset, in such a situation, they need to be given relief.
Taneja says, a middle path can be adopted in it. In which all parties have to come forward in this. Under this, oil companies reduce their expenses and refinery cost and provide immediate relief of Rs 3 per liter. Similarly, the central government should cut excise duty from Rs 1.25 to Rs 1.50 per liter. Along with this, the state governments also immediately reduce VAT from Rs 1.50 to Rs 2.50 per liter. If these steps are taken, consumers can get immediate relief of up to Rs 6 per liter on petrol and diesel.
How long is the relief expected?
Energy expert Narendra Taneja says options are limited in front of governments. In such a situation, it is to be seen when she decides to cut tax. But, if the prices of crude oil, or crude, continued to rise and it goes beyond the $ 70 per barrel level, then there may be an initiative to provide relief to consumers. That is, governments can cut taxes.
You know, the central government is currently charging Rs 32.90 per liter on petrol and Rs 31.80 per liter on diesel. Since March 2020, the retail price of petrol has increased by Rs 20.29 per liter. At the same time, diesel has become expensive at Rs 17.98 per liter.
At the same time, the increase in excise duty on petrol and diesel increases by about Rs 14 thousand crore annually in the exchequer. India imports about 80 percent of its crude oil. In such a situation, increasing the crude import bill will also increase, due to which the current account deficit (CAD) of the country can also increase.