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| Fuel on fire | | | Satwant Singh Rissam | 5/25/2018 11:40:14 PM |
| Whenever there is a rise in the prices of petrol and diesel a very strong resentment grows among the general public in India against the prevailing government for its failure to control the prices. Moreover, the leaders from opposition parties slam the prevailing government immediately. In past 10 days there is consecutive rise in prices of petrol and diesel for which the Narendra Modi government has to face the public and opposition parties who all are demanding corrective measures. Well, it is not something that is being only faced by the Modi government. I remember how before the 2014, the Bharatiya Janata Party (BJP) targeted the Manmohan Singh government for failure to control the prices of petrol and diesel. The BJP at that time has made up its mind that their road to victory may pass from a petrol pump and hence they very beautifully managed the protest series on social media against the rising fuel prices. At the end of the day, elections were to be won and there was this one easy method that was availed very well in advance. So I think in a way now this government is getting back what it gave away as an opposition.
It is known fact that the crude oil prices determine the fuel rates in our country. If we go a decade back then in July 2008 international crude oil rates were $142 per barrel which made petrol and diesel in the India to be sold at Rs 50.62 per litre and 34.86 per litre. In comparison to it, the international crude oil rates in May 2018 are at around $80 per barrel, but petrol is being sold at Rs 76.57 per litre and diesel at Rs 67.82 a litre. As I don't want to further this ongoing 'socio-political oil war' in India, I would just say that analyze these above data of rates to understand as to who was right and who is wrong. Basically, despite drop in international crude oil prices ever since the Modi government came to power, the fuel prices in the country were not reduced proportionately. It is result of this all that petrol prices have hit highest level under present government and diesel too is at record high these days.
Under the Manmohan Singh government, the prices of petrol and diesel were regulated and subsides were given to ensure that prices were tolerable and fuels remained cheaper. However, inspite of the fact that the present government introduced the deregulation of retail fuel prices yet the benefit of this step is not coming to consumer. With this all the question arises that where is the problem? Basically, the problem is "taxes" which are imposed by the government on petrol and diesel. Presently, the central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. In addition to it, states have VAT the rates of which vary from state to state. If we talk of J&K government then the government here is charging 21 % sales tax /VAT on petrol and 14.5 % on diesel. For this reason, these days when we pay Rs 80 for a litre of petrol out of it Rs 35-40 is going to the governments i.e. state and union. This revenue generation for the governments via fuels makes it clear as to why the centre and state governments have kept petroleum products outside the GST (the idea of which was one nation one tax). The loss of revenue and profits is the reason that there is reluctance in government to bring fuels under the GST as it will reduce the taxes that are levied these days.
Although the present government takes the credit for the fuel price reform after the BJP came to power but recently these fuels too got politicized when ahead of the Karnataka assembly elections oil companies froze the daily hike of petrol and diesel prices for almost three weeks. For obvious reasons, the government kept fuel prices in check during the Karnataka assembly elections but prices have started shooting up as soon as the polls were over. This shows that higher petrol and diesel prices cannot be ignored from a political viewpoint in our country. Whatever move the government makes over this issue shall surely be interesting to watch in near future considering that the BJP is in power in 20 states, other state elections are coming up this year and even Modi government does not have long time left in office. I believe a permanent solution to this problem lies in the inclusion of auto fuels under the GST to bring uniformity of taxes on petrol and diesel otherwise "fuel on fire" situation will keep coming as has come after four years to confront Modi government. |
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