Home Business Petroleum Price – Is the hike too ‘high’ to condone not?

Petroleum Price – Is the hike too ‘high’ to condone not?


People everywhere in the world do get affected by the international crude oil prices that usually go up more often than downward. It is not just people but even the trade and commerce that can sometimes really get jolted by the way the sudden hikes in petroleum prices decide the way the economy of a nation runs. As the world reacts to every hike in oil price in their own way, India is not an exception in this regard with various national cadre political parties too were involved in mud slinging and alleging each other as the cause for the debacle. A lot of brainstorming is perhaps needed to demystify the real reasons behind the underlying cause for frequent hikes in oil prices devoid of any budgetary declaration.


 ( Petroleum minister Dharmendra Pradhan supervises as authorities check a petrol bunk – source: HT )

Is the steep hike by the current central government ‘justified’?

The present BJP led central government in India has become a potpourri for abuses being hurled at them both by the opposition parties and common public alike. The million dollar question most people pose to the government is that if the current crude oil prices are around $80, then why do retail petrol and diesel prices higher today than in 2013-14 when they were over $100? And then why did the central government which hiked excise duty on petrol and diesel multiple times when crude oil prices fell is now reducing it when crude oil prices have gone up? What happened to state governments which generally charge a massive VAT on diesel and petrol abruptly cut down the tax a bit at their end? Is it just to keep the consumers walking on air especially when diesel price hikes will also show up in inflation, both in WPI and CPI? The point at issue is that both the central and the state governments have been held captive in the culprit bones of citizenry court.

Why do Indians continue to pay high oil price despite low global rates?

It is a given that consumers pay more than 100% tax (with state and central levies together) on diesel and petrol. Fuel prices in India have hit a three-year high despite global crude rates cut half over the same period that makes many Indian citizens wonder why they should still pay high for petroleum.


 ( An official BJP source explains how various factors are attributed in a liter price – source: Twitter.com )

While the central government avers that the states should cut more on fuel prices as they earn almost double than the centre through petrol and diesel taxes, a closer analysis on the fuel price breakup shows that the allegation made by the ruling BJP is not true.

( Former Minister P. Chidambaram slams BJP for the ‘unfair’ petrol price rise – source: starofmysore.com )

As BJP is sailing hard through the tough times created by the slow economic growth due to disruptions from demonetization and GST, the central government, however, finds it challenging to cut the duty on diesel and petrol. Adding to the GST effect, the subdued tax collections may further lead to more backlash towards the central government from the public and the states who are against the government plan to levy GST on petroleum products and have high hopes to slash the fuel rates in the coming months.    



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