PM Modi’s Actions on Petrol and Diesel Prices: An In-depth Analysis
As the cost of domestic petrol and diesel continues to rise, questions are being asked about the actions taken by the current government under Prime Minister Narendra Modi. Critics argue that more needs to be done to address the issue, while proponents point to various measures being implemented. In this article, we will delve into the current scenario, the historical context, and the arguments on both sides.
Current Scenario: Rising Fuel Prices
The increase in domestic petrol and diesel prices has become a significant pain point for many Indians. Despite international crude oil prices being at a relatively lower point, the cost of fuel in India has continued to rise. This has prompted several states to reduce their excise duties on fuel, but the overall effect is limited.
At the heart of the issue is the connection between international crude oil prices and local fuel prices. While the price of a barrel of crude oil has dropped to around $72, the domestic prices of petrol and diesel are still hovering around the 100-110 rupee mark. This discrepancy has raised concerns about the government’s role in setting domestic fuel prices.
Historical Context: 2012 Petrol Price Protests
Looking back to May 2012, a different story emerges. The Bharatiya Janata Party (BJP) and other opposition parties were agitated about hiked petrol prices, leading to massive strikes and protests across the country. At that time, petrol was priced at around Rs 80, yet the government was emphasizing their role in subsidizing the fuel, even though the cost of a barrel of crude oil was slightly higher at $109 USD.
Despite the lower global crude oil price today, the government is still charging around Rs 100 for a litre of petrol in some cities and Rs 90 in others. This raises questions about the government’s strategy and whether there are hidden subsidies or other factors at play.
Subsidies and Taxes: A Costly Quagmire
The pricing of petrol involves several layers of taxation and subsidies. According to calculations, the government gets around Rs 42 for a litre of petrol after refining and paying all commissions. However, they are selling it at a price of around Rs 100 per litre, with an additional 112% tax on the cost price. This is a massive margin, and some argue that it is not justified.
In addition, when GST (Goods and Services Tax) is added, the price of petrol can go up to around Rs 53 per litre. Critics argue that if the government had applied GST norms in 2012, the cost of petrol would have been significantly higher, eroding the subsidies provided by the previous government.
The political narrative suggests that the current government takes credit for subsidies, but the reality is more complex. For instance, in 2015, the government sold petrol at Rs 75 per litre, despite receiving around Rs 52 per litre for a litre of petrol after refining expenses. This suggests that the government’s fuel pricing policy has more to do with political calculus than pure economics.
Government Measures and Criticisms
Some argue that the government needs to take more proactive steps to address the rising fuel prices. Critics point to the fact that despite international crude oil prices being lower, domestic fuel prices have not decreased proportionately. There have been calls for a comprehensive review of the fuel pricing mechanism to reduce the burden on consumers.
Others support the government’s position, arguing that the complex nature of fuel pricing, including taxes and subsidies, makes it challenging to implement immediate price reductions. The focus is often on improving the efficiency of fuel distribution and reducing corruption in the system.
Regardless of the stance, it is clear that the rising fuel prices have implications for the Indian economy and the daily lives of citizens. While the government takes credit for subsidies, the reality of hidden taxes and the cost of doing business adds pressure to the consumer.
As the debate continues, one thing is certain: the issue of fuel pricing remains at the forefront of public and political discourse in India. Whether the government’s actions fully address the concerns of citizens remains to be seen.