Petrol touches ₹100/litre mark in Rajasthan’s Ganganagar: All you need to know
Petrol price touched ₹100 a litre in Rajasthan’s Sri Ganganagar district and rose to record highs elsewhere on Wednesday. Here is all you need to know about the price rise:
• ₹100 per litre retail price of petrol in Sri Ganganagar is the first time the fuel was sold at rates in the three digits anywhere in the country. In Delhi, petrol retailed at ₹89.54 a litre.
• Sri Ganganagar pays the highest rate for the fuel since it is the furthest from a nearby dispatching facility, which adds to transportation costs that are passed on to the consumer.
• Taxes account for more than 60% of the pump price of fuel. Part of these is central taxes and part, those levied by the state.
• In the case of Delhi, data available on the Indian Oil website shows that central excise duty and state value-added taxes added ₹32.9 and ₹20.61 per litre to the cost of petrol.
• The base price, freight and dealer commission amounted to just ₹35.78 per litre for petrol. In effect, almost 60% of what people pay for petrol is taxes.
• Prime Minister Narendra Modi criticised the previous governments for not doing enough to address India’s dependence on imports for oil.
• Petroleum minister Dharmendra Pradhan appealed to major oil producers to relax their self-imposed production cuts.
• Rising global crude oil prices and tight fiscal headroom appeared to limit the government’s ability to restrain the increase.
• The government has urged the oil producers’ cartel – the Organisation of Petrol Exporting Countries – as well as allies such as Russia to ease production cuts as higher prices are hitting demand and adding to inflation.
• Rajasthan chief minister Ashok Gehlot blamed the Centre for the high fuel prices as the latter has not reduced the taxes. He said if they reduce the taxes, then their revenue will decline. Gehlot said in view of the public sentiments, despite the pandemic, the state reduced 2% Value-Added Tax bringing a loss of ₹1,000 crore.
• Experts say despite much lower global oil demand, the restricted supplies and production cuts by oil-exporting countries are some of the major reasons for high oil prices.
• The government is not believed to be considering reducing the excise duty on fuel because of revenue concerns.
• India’s fiscal deficit is high at 9.5% of the gross domestic product in 2020-21 because of the Covid-19 pandemic. The Budget has also proposed ₹12 lakh crore borrowings in FY22 that would mean a high fiscal deficit of 6.8% next fiscal year.
• In these circumstances, the government has no space to immediately cut excise duties on petrol and diesel.