Will petrol and diesel prices suddenly skyrocket after March 10?

Petrol-diesel will become expensive after March 10

petrol and diesel prices ( Petrol- Diesel Rate) There has been an outcry in the whole country due to the fear of huge price hike in the country. Last year on November 3, 2021, the central government had reduced the excise duty on petrol by Rs 10 per liter and on diesel by Rs 5 per liter. Since then, there has been no increase in the prices of petrol and diesel across the country. It is believed that assembly elections in 5 states including Uttar Pradesh, Punjab (5 state assembly elections) Because of which the prices were not increased. Now with the conclusion of elections on March 7 and the results on March 10, people are fearing that there will be a huge increase in the prices of petrol and diesel. Media reports are also confirming this. But is this fear of people really going to change? So in this situation the government excise duty (Excise Duty) Can’t give relief to people by reducing it? Certainly these questions are very debatable.

What is the full story of petrol-diesel price hike?

If we talk about the price hike of petrol and diesel, then the most important role behind it is the price of crude oil in the international market. Domestic fuel prices are directly affected by international oil prices as India imports 85 per cent of its oil requirement. Apart from this, the price of the US dollar against the rupee and the demand for oil in the country also play their role in the price rise in their own way. But since the government has handed it over to the market, the tax collected by the central and state governments has started playing the biggest role in the price increase. The Modi government increased the excise duty on petrol and diesel 13 times and reduced it 4 times in the tenure of seven and a half years. Talking about April 1, 2014, then there was an excise duty of Rs 9.48 per liter on petrol and Rs 3.56 per liter on diesel. On 3 November 2021, it became Rs 27.90 per liter on petrol and Rs 21.80 per liter on diesel. This means that the Modi government has increased the excise duty of Rs 18.42 per liter on petrol and Rs 18.24 per liter on diesel so far.

It is being told in recent reports that the gap between the cost of oil and retail sales rates is increasing continuously. ICICI Securities has disclosed in a report that the state-owned retailers have to reduce the fuel prices by at least Rs 12.10 per cent on or before March 16, 2022, to recover the cost due to the rise in international oil prices in the last two months. liters will have to be increased. If the margin of oil companies is also included in this, then this increase will touch Rs 15.10 per liter.

Now it remains to be seen whether the government pays this amount on its own in the form of one-time increase or it slowly robs the pockets of the people.

Not only crude oil, the government is also playing sports

There is no denying that the price of crude oil that India buys has gone up to $ 117.39 per barrel on March 3, 2022. It is also true that this fuel price is the highest after the year 2012. In early November last year, when petrol and diesel prices were put on hold, the average crude oil price stood at $81.50 a barrel. Meaning the price of crude oil has increased by about $ 36 per barrel in crude oil. But if we calculate from the year 2014 to the year 2021, then how the government is looting the people becomes completely clear. In May 2014, the price of crude oil in the international market was $ 106 per barrel and then the price of petrol was Rs 71.41. Talking about October 2020, then the price of crude oil was $ 41 per barrel and then the price of petrol was Rs 81.06 per liter. Talking about January 2022, the price of crude oil was $ 86.27 per barrel and then the price of petrol was from Rs 95 to Rs 110 per liter.

The meaning is clear, the central and state governments continuously increased the tax, due to which the consumers did not get the benefit of cheap crude oil. It can also be understood in the form that for every rupee increase in excise duty of petrol and diesel, there is an increase of Rs 13,000-14,000 crore annually in the central government exchequer. So you can imagine that the Modi government has so far increased the excise tax on petrol and petrol by Rs 18.42 only during its tenure. It can be easily estimated that how many lakh crores has increased in the exchequer in these seven years. Not only this, due to the reduction of crude oil prices in the international market, the government also helps in reducing the trade deficit. Despite this, the government did not give any benefit to the public.

Russia-Ukraine war raised crude oil prices

The effect of the Russo-Ukraine war is now beginning to affect the global market and common life in the countries of the world. As a result of this, the price of crude oil in the international market reached the highest level of 10 years.

Soon after the Russian attack on Ukraine on 24 February 2022, stock markets around the world crashed, gold prices soared and crude oil reached record levels. Russia is a major producer of oil and natural gas. According to the BP Statistical Review, Russia was second in terms of production of crude oil and natural gas condensate in 2020. If calculated on a daily basis, Russia exports 50 lakh to 60 lakh barrels of crude oil. Because of the attack on Ukraine, since many types of sanctions have been imposed on Russia. This is affecting the supply of crude oil. Due to these reasons, crude oil is making a new record every day in the international market.

Talking about India, it is dependent on other countries for more than 85 percent supply of crude oil. However, India imports very little i.e. one percent of oil imports from Russia. But the increase in prices in the international market will have a direct effect. In such a situation, the question arises whether our government has no option to keep the prices of petroleum products stable or reduce the prices? Certainly the government has options to reduce the prices of these products. In these, options can be considered to deregulate prices and reduce tax on them. It is completely in the hands of the government. By reducing the tax, the government can give relief to the people by making the fuel cheaper. Governments can compensate for the reduction in excise and VAT by reducing their wasteful expenditure. But the intention of the government should also be there.

Is the government not taking advantage of the weak opposition?

The central government is aware that there is a weak opposition in the country which is not able to fight against the rising prices of petrol and diesel on the ground. And the government is taking full advantage of it. The opposition has to raise its voice strongly on such issues, but since the opposition is scattered, not strong, the poor people of the country are paying the price for it. Second, due to the Corona epidemic last year, the revenue of the government decreased significantly, the sources of revenue like GST, corporate tax, income tax have weakened, so the expenditure of the government has increased during this period. In such a situation, the government is not reducing the tax on fuel to increase revenue and prevent the increase in fiscal deficit. Liquor and petrol, diesel are the best means of earning for the government. Since these do not come under the purview of GST, there is no compulsion for the government to go to the GST Council to increase the tax on them. When there is a will, an increase in excise duty is imposed.

However, directly speaking, during the Corona epidemic, the prices of crude oil came down in the international market, in such a situation, the prices of petrol and diesel should have also fallen, but the government did not allow this to happen. Last month, BJP MP Subramanian Swamy, in a direct attack on his own government, had called the rising prices of petrol and diesel as a weapon of exploitation of the public. How much does the price of petrol and diesel depend on the price of crude oil in the international market? Why should the benefit of cheap crude oil not be passed on to the public? Why were petrol and diesel not brought under the ambit of GST? After all, why was the excise duty on petrol and diesel increased repeatedly? On all these questions, the government should tell the people of the country and try to make sure that the burden of huge price hike of petrol and diesel should be minimized on the people of the country.

(The author is a senior journalist, the views expressed in the article are the personal of the author.)

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