There’s no correlation between international crude oil prices and domestic petrol rates. The financial crunch has been impacting the Centre and state governments thanks to the Covid-19 spread in India and across the world. Not only common man, the governments are suffering from the revenue loss as the economic activity grinds to halt from late March. The unlock 1.0 in June brought some relief to the governments and common man as well. The financial disaster caused by the Covid-19 pandemic has been forcing focus of the Centre and the states in the direction of the oil area to generate extra income.
This has put an additional burden on consumers, who’re suffering more from job loss or salary cuts, etc. No one is benefiting after the historical pricing crash witnessed in early May. However, the governments are minting money from the situation, said a retired engineer in Hyderabad.
The cash-stripped governments are now desperate for income generation and moving closer to petroleum merchandise which have now ended up in high taxation amid increased backlash from the public. But the scenario has denied the customers of a probability to pay for petrol and diesel at nearly 2005-06 costs that would have been a massive remedy for them in this hard period.
According to a latest report by Ind-Ra (India Ratings and Research ), 21 states suffered Rs97,100 crore revenue in April alone due to the lock down. The disruption in production, supply-chain, all the industry verticals, retailing business brought the economy to standstill.
Since March this year, the nationwide lockdown was announced, the Centre raised excise duty on petrol and diesel by way of an unheard of Rs13 and Rs16 per litre respectively. The excise duty hike in two tranches gave the Centre an extra income to the tune of Rs 2,25,000 crore in one full year.
Further, the Centre may hike excise duty on the two products by Rs 3-6 per litre. So that it can generate Rs 50,000-60,000 crore additional revenue. This will comfortably give total earnings for the Centre from petroleum products to the tune of Rs 2,75,000 crore besides over Rs 2,15,000 that it already gets in a year as excise revenue from the petroleum sector.
The states are now not a long way in the back of with Haryana, Tamil Nadu, Maharashtra, Karnataka, West Bengal, Uttarakhand, Delhi and a few others elevating VAT on petroleum merchandise to meet the shortfall in their GST collections.
The governments’ income from the levy of income tax/VAT on petroleum merchandise has been rising persistently considering 2014-15 when it stood at Rs 1,37,157 crore, to Rs 2,01,265 crore in 2018-19. In 2019-20, the states have earned Rs 2,00,247 crore from taxes on petroleum products.
On the other hand, the fuel price were paused on Tuesday (June 30) as oil marketing companies (OMCs) decided not to change for now. The petrol price per liter was Rs80.43 in New Delhi and diesel price at Rs80.53. In June alone, petrol price rose by 9.17 per litre and diesel up by Rs11.14.
All this has come at a time when oil markets globally have come to be beneficial for predominant strength importing nations like India that meets over eighty five per cent of its oil wants via imports.
Even now, international oil costs are greater than forty per cent decrease than the January lows, however, retail expenditures of petrol and diesel have overshot the January levels, a good deal to the soreness of the buyers who are already bearing the brunt of the financial disaster with earnings cuts or job losses or extreme squeezing of enterprise operations.
International crude costs are hovering at round $41 a barrel. At comparable degree of crude expenses or a bit greater in the years 2004-05, 2015-16 and 2016-17, the retail fee of petrol hovered round Rs 35 a litre, Rs 60 a litre and Rs 65 a litre respectively.
Diesel expenses at some point of these years moved from Rs39 a litre to Rs45 and Rs 53 a litre on an average. But the retail fee of petrol and diesel on Monday (June 29) stood at Rs80.43 and Rs 80.53 a litre, respectively, in Delhi even although crude is round $41 a barrel.
Consumers expected steep fall in petrol and diesel prices in April and May when crude oil prices dropped to simply about $20 a barrel. Contrary, the Centre and state governments increased taxes Even even though the Centre and kingdom governments raised taxes on the two petroleum products, oil groups have been requested now not to elevate the retail fees on account that March 14. So when, oil organizations have been given a go beforehand and they stared day by day charge revision, petrol and diesel expenditures went up on 22 of the 23 days for the reason that June 7 by way of over Rs eleven per litre even even though for the duration of this duration international oil market remained pretty steady with crude hovering between $40 and $42 a barrel.
Taxes on petroleum merchandise and its non-inclusion into the GST fold is the high purpose why it has end up the milking cow for governments for any exigencies. Picture this, the base charge of both petrol and diesel is round Rs 22 per litre, however the retail charge is Rs eighty a litre, that means that taxes account for greater than 200 per cent of the charge of the product.
However, Union Petroleum Minister Dharmendra Pradhan supported the petrol and diesel prices increase and it doesn’t impact the common man.
The demand for petrol and diesel was declined by 70 per cent due to lockdown. Now, the demand is picking up as the economic activity has resumed in unlock 1.0. Entire country is like a family. When a problem comes in a family, the person carefully manages the finances to meet the future challenges. The petrol price hike should be seen from this point of view, said the minister.
The writer is a business journalist with 27 years of experience