Economy

Petrol, diesel prices scale new highs on rupee woes

Petrol, diesel prices scale new highs on rupee woes

Nearly 21 opposition parties joined the Congress in protest over rising fuel prices against Narendra Modi-led NDA government in the Centre after the Congress has called for a nationwide shutdown or Bharat Bandh on Monday to protest rising fuel prices and depreciation of the rupee.

As per the Indian Oil Corporation, a price hike of 39 paise and 44 paise per litre was implemented on petrol and diesel, respectively, in the national capital.

Pradhan had in May this year - when petrol, diesel prices had reached their earlier peaks - said that the government is working on a long-term solution to reign in fuel prices when they reach uncomfortable levels. That it is unpopular is evident by the Rajasthan government's decision, ahead of an assembly election, to reduce local taxes on petrol and diesel. Diesel in Parbhani is Rs 77.92 per litre. Till May 31, when the LDF government effected a slight cut in the sales tax on petrol and diesel, Kerala's was the sixth highest sales tax levy on both petrol and diesel. Here is the case of petrol: from Rs 9.20 a litre it shot up to Rs 19.48 per litre for petrol.

Here is one aspect that Left parties who are in the forefront of the nationwide hartal against the galloping fuel prices on Monday should ponder. "If taxes are cut, prices will decline significantly". The tax ratio can be raised not by increasing rates but by bringing evaders and non-filers in tax net. Because the price is built up by excessive taxes on petrol and diesel. Across the state, petrol prices have breached the mark of Rs 88 per litre, while diesel is around Rs 76 per litre, as mentioned by the All India Petrol Dealers Association (AIPDA). The tax imposed by the Centre on petrol (including customs and excise duties, and other cesses) is 52.75 per cent, and on diesel is 38.53 per cent. At the same time, the diesel prices too marched ahead and was priced at Rs 78.83 per litre. This led to its excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18.

Nearly half of the fuel price is made up of taxes. So states get Rs 30 out of Rs 42 collected as taxes.


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