Petrol Prices Cut brings more trouble

The whole country was crying foul on the rising fuel prices where government was taking a big share of the price increase by way of duties. These duties were increased when crude prices dropped so that government can use the funds to meet some of its immediate expenses while people at large have already been used to high fuel prices.

After the down cycle got over in Crude and prices moved up, the additional excise duty gave equivalent amount of revenue to the government. Many state governments have become so used to this income that now if it is removed, many of them will not be able to pay salaries to their state government employees.

So as a nation, people are indirectly helping governments tide through their challenges which has been mostly caused due to their inefficiency.

Now, when government decided enough of public outcry and reduced the excise duties on petrol by taking a hit of ₹1.50 to the centre, asking the OMC’s to take a ₹1 hit and requesting state governments to chip in with a reduction of ₹2.50 per litre of petrol. The loss to the exchequer is 10500 crores.

Within minutes of the announcement, now the media is talking about what the country will lose due to this cut in duties. Ayushman Bharath program will get impacted. Subsidised Kerosene and LPG will now cost more. Funding or Air India and sinking banks might be a challenge & direct tax collections will not meet the shortfall which will increase our deficit. This thought brings to picture where the money was going. In one way when people drove around the country using fuel, they funded the poor and needy.

From saying that, the government is adamant of not reducing duties as the common man is suffering due to high petrol prices’ to now saying “because of reduction in prices poor man will not get many of the facilities that is about to come to him.” Looks like the distress needs to be there in some way of the other, which one is best will come out soon.

State governments that are ruled by parties other than that at the centre (the BJP) have gone against the cut and have announced that they will not reduce taxes. Now, this will play out to the favour of BJP in the upcoming elections. Probably the expectations of the wide section of the population today about the 2ndterm for BJP at the centre might be a reality.

About Author

Ramesh Sigamani

Related posts

Shifting of Crude Oil pain

In early October this year the emerging economies predominantly India was worried about crude increasing rapidly on its price. Many of analyst expectations that it will not go beyond $63 went wrong, it moved past $80 and there were pessimists in the forefront talking that it will soon cross $100 and...

Read More

FM’s thoughts on Oil & Loan Waiver

Jaitley’s talk at the ET awards, “Users should pay for oil… else fiscal deficit will rise and add to the current account deficit. It will push up inflation, weaken rupee. Tax on fuel prices should come down not by creating fiscal deficit, but through an increase in the non-oil...

Read More

Give a Reply