Increased prices, while on the one hand consumers are spoiling the budget, while the government too. The government will have to solve it soon.
The continuous increase in the prices of crude oil in the international market is becoming a matter of concern for the country’s economy. Diesel prices have broken records of 16 years. Prices of petrol have also surpassed the level of 2013. A few years back, in the Karnataka elections, the bribe of oil companies that the prices were levied was lax after the election was over. Since then, the prices are constantly climbing. Increased prices, where the consumer budget goes on one side, the government too. Increasing costs of production costs and traffic increases prices of things.
Increasing the bill of imports puts emphasis on foreign exchange reserves. The balance of the central government’s budget deteriorates, financial losses increase. India has become the importer of the world’s third-largest crude oil importer. Eighty percent of the crude oil requirement is dependent on imports. In the year 2009-2010, roughly 159 million tonnes of crude oil was imported, which has reached more than 220 million tonnes today. Meanwhile, the import bill has increased by Rs 3.75 lakh crore to more than Rs 5.65 lakh crore.
Method of pricing
Fluctuations in prices of petrol and diesel are common. While most consumer goods remain for a long time at a price level, the prices of petrol and diesel are changed in very short intervals. On June 16, 2017, there was a provision for change in the prices of every 15th day in the country’s market, which is no longer. Now prices can be changed every day. The cost of crude oil and the purchasing power of rupees in the international market are the main basis for price determination. Experts believe that the increase in crude oil prices by a dollar-a-barrel increases the import bill by 823 crores, which is seen even when the price of rupees is low.
At this time, the Indian rupee is on the slopes, the crisis is going deeper. Crude oil production and business in India is in the hands of only five companies, they also determine the price. 95 percent of the turnover is in control of government companies – BPCL, IOCL, and HPCL. The remaining 5 percent is in the hands of two private companies Reliance and Essar. These companies buy crude oil from international companies and oil traders, refine and deliver to petrol pumps. The Central Government charges the excise from them at the prescribed rates, in which the changes are also in their jurisdiction. State governments take VAT on petrol and diesel, they also decide the rate
Treasure of the Government filled
The price of petrol and diesel that the consumer gives includes excise duty, state taxes as well as gasoline pump dealers’ profits, environment cess, surcharges etc. About half of the price of petrol is of taxes and other items, it is about 45 percent in diesel. As the prices rise, the central and state governments get more tax. The public has to raise the burden. In 2014-2015, the central government had benefitted from the excise and taxes levied on petrol and diesel with a profit of Rs 1.72 lakh crore, which increased to Rs 3.34 lakh crore in 2016-2017.
From time to time the government keeps changing tax rates, but generally, this change never gives consumers a proportion of the proportion of international price changes. State governments also have huge benefits from tax, they want to maintain their control at the tax rates. In 2014-2015, state governments received Rs 1.40 lakh crore from taxes imposed on petrol and diesel, which increased to 1.89 lakh crore in 2016-17 in 2016-17. This is the reason why most state governments are opposing bringing gasoline and diesel under GST.
Equality in petrol and diesel prices is not possible due to the variation in tax rates by state governments. Wherever consumers have to pay less than much more. On June 21, 2018, petrol was priced at Rs 80.40 a liter in Mumbai, while Chennai, Kolkata, and Delhi were priced at Rs 79.47, Rs 79.24 and Rs 76.57 per liter respectively. Patrols, Puducherry, Trivandrum, Bhopal, Jalandhar, and Srinagar were involved in the cities where the price of petrol was above 80 rupees on that day. In most cities of the northeast, petrol was sold at less than Rs 73 per liter on that day.
In the past seventy years, our policymakers did not make serious efforts for self-reliance in the field of energy, because they did not have difficulty in importing oil. The Modi government has started to emphasize the development of alternative energy like solar energy. Which is a bold step? Nature of crude oil has also given India a good amount of nature. But for the purposes of exploration and refining, the tools which should have been developed should be considered as equal to no attention. One reason for this is the pressure of the oil-producing countries.
Public awaiting relief
The cost of petrol and diesel to ordinary consumers in India is higher than many other countries. In America, the average consumer price of one day gas comes to about 0.5 percent of its earnings. In European countries, it is close to 2 to 4 percent, while in India it is around 20 percent. It is true that in the developed countries, the level of income is much higher than that of developing countries, but it can not be denied that the principle of purchasing power parity on the principle of purchasing power parity in India, the prices of things in developed countries Expectations are very low, especially related to the necessity of life. Petrol and diesel are also in required substances, then why are the countrymen forced to pay them heavily. If the Central and State Governments cut taxes imposed on petrol and diesel and provided them to the public at a cheaper rate, then it would be considered as the achievement of a democratic government.
The Petroleum Minister has said to reduce the tax and think about subsidizing the government oil companies to avoid losses. Hope this thinking will be implemented. GST has been implemented in the country, but petrol and diesel have been excluded from it. In America, Australia and many countries of the world, these substances are within GST. Center and state governments need to make quick decisions. Consumers have to pay different prices in different states now. Bringing petrol and diesel under the GST system will get the benefits of a single tax market for all consumers in the same manner. Unless it happens, the government can provide relief to the consumers by cutting at least 10 to 15 percent of tax rates.
The constant increase in crude oil prices in the international market is becoming a matter of concern for the country’s economy. At the same time, some days before the Karnataka elections, therein in the oil and gas prices of the country has lent itself to the end of the election. Since then oil prices have been steadily rising. Increased prices, while on the one hand consumers are spoiling the budget, while the government too. The government will have to solve it soon.
BY:- Abhay kushwaha