up on the roof! Petrol costlier by Rs 36 a liter, diesel by Rs 26.58 in less than 18 months
Petrol and diesel prices were hiked by 35 paise per liter on Saturday for the fourth consecutive day, taking the total increase in rates on petrol to Rs 36 per liter and on diesel by Rs 26.58 since the beginning of May 2020, when taxes on the two fuels were raised. Were. To record the level.
According to the price notification of the state-owned fuel retailers, the price of petrol in Delhi is now Rs 107.24 per liter and diesel comes at Rs 95.97.
The latest increase has pushed pump rates across the country to their all-time high after a sustained rise in international oil prices. While petrol is above Rs 100 per liter in all major cities, diesel has crossed that level in over a dozen states.
The total increase in the price of petrol since May 5, 2020, following the government’s decision to increase the excise duty to a record level now stands at Rs 35.98 per litre. During this, the price of diesel has increased by Rs 26.58 per liter.
The government had raised excise duty on petrol and diesel to offset the benefits to consumers from the fall in international oil prices by up to $19 a barrel. While the international prices have touched USD 85, the excise duty on petrol remains at Rs 32.9 per liter and on diesel at Rs 31.8.
Oil Minister Hardeep Singh Puri on Friday equated the demand for a cut in excise duty to ‘an ax to his feet’, saying such a levy has made free COVID-19 vaccines, food and cooking gas available to lakhs of people amid the pandemic. Government schemes have been funded to make it happen.
“I think in India we get this simple political narrative[that]’prices have gone up, why don’t you reduce your taxes’ … feet in the process,” he said late Friday.
He was asked whether the government would cut taxes, which account for more than 54 per cent of the price of petrol and 48 per cent of diesel, to ease the burden on consumers.
“Yesterday (on 21st October) we completed one billion (against covid) vaccinations, we fed 90 crore people for a whole year (during the pandemic), we provided 3 meals a day, we implemented the Ujjwala scheme (free kitchen). of providing gas (LPG refills) to 8 crore poor beneficiaries). All this and more than Rs 32 per liter of excise duty (imposed by the central government),” he had insisted.
The money collected from the tax also goes towards construction of roads, construction of houses for the poor and other social welfare schemes.
On the demand for reduction in taxes, he said, “I am not the finance minister, so this is not a proper answer for me.” “That Rs 32 per liter that we collect gives us the ability to provide all these welfare services, including 1 billion vaccines.”
The rise in fuel prices has raised concerns over inflation as diesel is the main fuel used to transport goods, including agricultural commodities.
Opposition parties, including the Congress, have criticized the government for the hike in prices and demanded reduction in taxes.
Puri had said that while the Center levies a specific excise duty on petrol and diesel, which does not change when the price of oil rises to US$19 per barrel or US$84, the state government levies the ad valorem rate of VAT, the occurrence of which occurs every year. increases. Growth.
He said petrol prices were deregulated in 2010, making it effectively linked to world markets.
In October 2014, the Modi government freed diesel prices from government control. He said the Kerala High Court had suggested that the inclusion of petrol and diesel in the Goods and Services Tax (GST) regime be placed before the GST Council.
And when the council considered it in its meeting in Lucknow last month, “state governments thought otherwise,” he said, referring to the panel’s decision not to include petrol and diesel in the GST regime, which means central excise duty. and state VAT would have to be included. in a similar tax.
Finance Minister Nirmala Sitharaman had said after the GST Council meeting that the panel has unanimously decided to keep petrol and diesel out of the GST regime.
The council is headed by the Union Finance Minister and includes representatives from the states and union territories.
Puri had also referred to the Rs 1.34 lakh crore oil bonds issued by the previous Congress-led UPA government.
Though he did not link them to current fuel prices, bonds are among the factors that BJP leaders are responsible for increasing fuel prices.
During the previous Congress-led UPA government, petrol and diesel as well as cooking gas and kerosene were sold at subsidized rates.
Instead of paying subsidies to parallelize the increased costs due to artificially suppressed retail sales prices and international rates that exceeded US$100 a barrel, the then government gave state-owned fuel retailers a total of Rs. Issued oil bonds worth Rs 1.34 lakh crore. .
These oil bonds and the interest thereon are currently being paid.
According to the Finance Ministry, out of Rs 1.34 lakh crore worth of oil bonds, only Rs 3,500 crore of principal has been paid and the remaining Rs 1.3 lakh crore is to be paid between the current fiscal and 2025-26.
The government has to repay Rs 10,000 crore in this financial year (2021-22). 31,150 crore in 2023-24, Rs 52,860.17 crore next year and Rs 36,913 crore in 2025-26.
However, the collection from the hike in excise duty is much more than the amount paid to the oil companies.
Minister of State for Petroleum and Natural Gas Rameshwar Teli told Parliament in July that the central government’s tax collection on petrol and diesel rose by 88 per cent to Rs 3.35 lakh crore as of March 31 from Rs 1.78 lakh crore a year ago.
Excise duty collection in pre-pandemic 2018-19 stood at Rs 2.13 lakh crore.
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