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India to take a long-term view on fuel pricing: Ravi Shankar Prasad
27 May 2018, 12:36 | Lionel James
File Image for Representational Purposes
The Narendra Modi-led government cut the excise duty on fuels by Rs 2 a litre last October. Since 2014, the Modi government has increased excise duty on petrol and diesel nine times and the total quantum of excise duty raised during this period was Rs 11.77 per litre on petrol and Rs 13.47 per litre on diesel.
The petrol price in Mumbai touched Rs 84.99 a litre on Wednesday, according to Indian media reports.
While the government promised some relief soon, the spike in petrol and diesel prices continued. 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.
Higher prices are denting popularity of the ruling Bharatiya Janata Party, which face polls in key states later this year and a nationwide election in early 2019.
More than the rise in crude prices that hit $80 on 22 May, the highest in four years, it is the weakening rupee that is of concern. The cost of petrol in Delhi today is at Rs 77.47/litre, and those having diesel cars will have to dish out Rs 68.53 per litre.
The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October a year ago by Rs2 a litre.
"The oil glut that made fuel prices so low two to three years ago is fast becoming a distant memory and the bad times of the high pump prices of 2012 may unfortunately be returning".
The domestic fuel prices are rising as the crude oil price in the worldwide market is endlessly rallying upwards. 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). This is because of the global oil price fluctuation.
In all, duty on petrol rate was hiked by Rs11.77 per litre and that on diesel by Rs13.47 a litre in those 15 months that helped governments excise mop up more than double to Rs242,000 crore in 2016-17 from Rs99,000 crore in 2014-15. It remains to be seen whether the common man will get a short-term relief or maybe a long term.
India had spent $87.72 billion to buy oil from the worldwide market in the last fiscal, the bulkiest item on India's import bill of $417.57 billion. Failure to do so will severely dent Modi's Mission 2019.
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