Petro Shock: Anatomy of Petroleum Prices

Petrol Price

Modi Govt may have been blaming the rising international crude prices for the current rise in the prices of Petrol and Diesel but anyone who is familiar with how prices move up and down in the international market would say that the government has only to blame itself because it failed to see the looming crisis while reaping rich dividends on account low crude prices.

Undoubtedly, the current surge in the prices of petrol and Diesel is on account of falling rupee against the US dollar and also the rising international crude prices but at the same time it is important to ask why the government failed to take any corrective measures in order to insulate the consumers from this unexpected fluctuations of weak Indian rupee.

It’s time to ask our Prime Minister as why he let his government rest smugly and claim efficient fiscal management while knowing all along that it was a result of cheaper oil prices worldwide? Why his government raise excise duties on petroleum products 12 times in last over 4 years and why it was kept out of the goods and services tax (GST)? After Modi became Prime Minister in May 2014, the excise duty on petrol has gone up by 211.7 % and on diesel by a staggering 443.06 %.

In 2014, the excise duty on Petrol for each litre was 9.20 Rs which increased to the present 19.48 Rs. Similarly, the excised duty on Diesel was 3.46 Rs in 2014 but after 4 years it climbed to a massive 15.33 Rs. If today, Modi Govt decides to bring the excise duty at par with 2014 level, the average drop in the prices of Petrol will be 10.42 Rs and 12 Rs for every litre of Diesel.

According to an estimate, the central Govt has collected a whopping Rs 11 lakh crore in tax from Petrol and Diesel in last 4 years between 2014-15 and 2018-19.BJP Govt came at the centre when the international crude was at all time low and Modi Govt not only took the advantage of the soft oil prices but on contrary it adopted a predatory policy on oil prices.

We are hearing various arguments from the leaders of ruling party as why suddenly the prices of petroleum products are touching the roof. Perhaps, the weirdest explanation came from a union minister who said that fuel prices in India are rising because of the high international crude prices .This is farthest from the truth and Prime Minister Modi is brazenly trying to fool people on this sensitive issue of petrol and diesel prices.

Let us have the reality check about the international crude prices. Since BJP came to power in 2014, the price of crude oil in the Indian basket fell from $109.05 per barrel in June 2014 to $46.56 per barrel in June 2017, a fall of almost 57%. Subsequently, it again it rose to $73.83 per barrel in June 2018.

This data comes from Petroleum Planning & Analysis Cell (PPAC) which falls under the Ministry of Petroleum and Natural Gas. Therefore, the prices have, as a matter of fact, dropped by about 32% since Modi government came to power. India still imports her 80% requirement of petroleum products through imports.

But there is more than meets the eye. The lies of spin-masters of Modi government is further exposed by the fact that international crude oil prices have little to do with what an average consumer pays for it. The prohibitively high taxes on Petrol and Diesel are the real villains which are something, government should control but strangely it has kept silence on these vital issues.

On contrary, it is hell bent on proving that all this will be ultimately beneficial to the people because Govt will have more fund at her disposal to pay for the welfare programmes. This could have been true, had the government have been spending the money for the benefit of the people.

But, if we see the track record of this government, we find that there have been cutbacks in almost all central welfare schemes over the years in the last 52 months with paucity of resources given as the main excuse. So, the argument of passing the benefit to people falls flat since the centre doesn’t seem to be redirecting the windfall from oil taxes to any public good.

Almost 46% of the retail price of petrol is made up of taxes charged by the Central as well as the state governments. If we look at the figures, in 2014-15, Modi government was making apprx Rs.1,22,200 crore from taxes that it levied on oil which by 2017-18, increased to more than double at Rs. 2,80,000 crore, a gigantic increase of 129%.

BJP Govt also seems to be passing the buck to the state Govt by saying that it is state governments who are actually responsible for the spiraling of oil prices. As far as state taxes are concerned, it has seen a 32% increase during the past four years. But if we calculate the total taxes collected by states, the figure comes out to be Rs.1, 86,000 crore on fuel which is nowhere near the princely amount of Rs.2, 80,000 crore, which is going to centre’s kitty.

Moreover, BJP is either on its own or in coalition with other parties is ruling government in 21 states; hence the onus to lower the exorbitantly high taxes is more on them than the opposition ruled states. Only yesterday, has Rajasthan, one of the BJP ruled state government has reduced the tax, but that is more because of political compulsion than anything else as the state is likely to have the Assembly elections in a few months.

While the common man is reeling under the pressure of high Petrol and Diesel prices, the corporate houses appears to have no such issues as the government seems to be more than generous with them. The big business houses, despite having a poor credit score have been indiscriminately given loans which they are now refusing to return.

It’s a strange coincidence that such bad loans given from public money collected through taxes have reached over Rs.11 lakh crore, the same amount which Modi Govt collected through tax on petroleum products in last 4 years. It raises a pertinent question-are the consumers of Petrol and Diesel in India paying for the profligacy of delinquent corporate houses.

If we see the pricing pattern of petroleum products like Petrol, Diesel and LPG, it appears as if the government has resorted to extortion towards the common people of this country in order to satisfy the greedy appetites of business houses. The government needs to understand the basic fact that these petroleum products are used not just by the rich or middle class people but also used for the irrigation purposes by the farmers, for transporting the essential commodities across the country and is directly connected to the prices of everyday products. These abnormally high prices of Petrol selling at almost Rs 90 for a litre and Diesel at Rs 77 per litre rob the people of their hard-earned money and no amount of lies by this government will assuage the anger of common man who is forced to undergo through this daylight robbery.

Disclaimer: These views are solely of the author.

Total
39
Shares
Related Posts