Reduction in fuel prices would not immediately impact price of commodities: Experts

Experts said that this reduction would not immediately impact the price rise that several essential commodities have seen in the recent months

While welcoming the central government’s decision to reduce the excise duty on fuel, Mumbaikars are now looking to the state government in the hope that it would announce a reduction in Value Added Tax (VAT) to further bring down fuel prices in the city.

The Centre on Wednesday announced the reduction of excise duty on petrol and diesel by ₹5 and ₹10 respectively. Experts said that this reduction would not immediately impact the price rise that several essential commodities have seen in the recent months. (HT PHOTO)

However, experts said that this reduction would not immediately impact the price rise that several essential commodities have seen in the recent months.

“It is a welcome move that the prices have been decreased on the occasion of Diwali. Fuel prices should be reduced further and the state government should also reduce VAT. Though the fuel prices are still high but at least there has been a decrease,” said Aishwarya Patel, a Vikhroli resident.

Shirish Deshpande, chairman of Mumbai Grahak Panchayat(MGP) stated that decrease in prices of essential commodities was unlikely. “Once manufacturers or traders increase the price of commodities is it very difficult to reduce them unless the government comes down heavily on them. The traders keep on increasing the prices with the rise in fuel prices.”

The Centre on Wednesday announced the reduction of excise duty on petrol and diesel by ₹5 and ₹10 respectively. Following this, the price of petrol came down to Rs.109.98 and diesel came down to Rs.94.14 in Mumbai on Thursday, decreasing by ₹5.87 and ₹12.48 respectively. By comparison, petrol and diesel were priced at Rs.115.85 and Rs.106.62 a litre respectively on Wednesday.

The decrease was more than the reduction announced by the Centre due to the cascading effect of reduction of central duty on VAT. Maharashtra levies 25% VAT on fuel and a cess of ₹10.12 and Rs3 on petrol and diesel respectively.

“The state taxes are levied on the collective figure of base price and central duty on the fuel. The reduction in the central duty has resulted in the reduction in value of the VAT helping in reducing the price further than the reduction initiated by the Centre,” an official from an oil company who did not wish to be quoted said.

Petrol is now being sold at the price it was sold on October 9, while diesel is now being sold at the price it was on June 11.

Fuel prices in the city began increasing starting May 3, when a litre of petrol cost Rs.96.83 and a litre of diesel cost Rs.87.81.

Transporters associations also expressed relief at the decrease in fuel prices. “It is a small relief to the transport fraternity which was getting trampled under the ever rising fuel prices. Our long term demands, however, are still not met. These include quarterly revision in fuel prices, uniformity of fuel prices all across the country and petroleum products to be brought under the purview of Goods and Service Tax (GST),” said Bal Malkit Singh, chairman, All India Motor Transport Congress(AIMTC), said.

The petrol dealers however stated that the prices have been reduced at the expense of loss to the dealers across the country. “Petrol dealers have suffered the most due to the decrease in the fuel prices. Even a small dealer has suffered a loss of nearly Rs3 lakh. This is because the petrol dealers across the country due to the approaching holidays already stored their pumps in full capacity on Thursday. There has been a drastic loss in a single day,” said Uday Lodh, president, Federation of all Maharashtra Petrol Dealers Association (FMPDA).