Greed for Revenue Keeps Petrol, Diesel Prices High Even in Low Oil Price Market
The economic crisis triggered by the COVID-19 pandemic has once again shifted attention of the Centre and the states towards the oil sector to generate additional revenue for meeting the spending needs for exigencies.
 
The milking of the sector for revenue has gone to such an extent that common consumers have turned into beasts of burden carrying the load of higher Central and state taxes and paying for jacked up auto fuel prices at a time when global oil prices remain moderate after the historic pricing crash witnessed in early May.
 
Since March this year, just before the nation-wide lock-down was announced, the Centre has raised excise duty on petrol and diesel by an unprecedented Rs13 and Rs16 per litre, respectively, in two instalments. This itself will provide the Centre additional revenue to the tune of Rs2,25,000 crore in one full year. 
 
Moreover, the Centre can further raise duty on the two products by Rs 3-6 per litre, thereby raising another Rs50,000 crore-Rs60,000 crore. So, the total earnings for the Centre from petroleum products itself could top Rs2,75,000 crore in additional revenue besides over Rs2,15,000 that it already gets in a year as excise revenue from the petroleum sector. 
 
The states are not far behind with Haryana, Tamil Nadu, Maharashtra, Karnataka, West Bengal, Uttarakhand, Delhi and a few others raising VAT on petroleum products to meet the shortfall in their GST collections. 
 
The state governments' revenue from the levy of sales tax/VAT on petroleum products has been rising consistently since 2014-15 when it stood at Rs1,37,157 crore, to Rs2,01,265 crore in 2018-19. In 2019-20, the states have earned Rs2,00,247 crore from taxes on petroleum products. 
 
All this has come at a time when oil markets globally have become favourable for major energy importing countries like India that meets over 85 per cent of its oil needs through imports. 
 
Even now, global oil prices are more than 40 per cent lower than the January levels but retail prices of petrol and diesel have overshot the January levels, much to the discomfort of the consumers who are already bearing the brunt of the economic crisis with salary cuts or job losses or severe squeezing of business operations. 
 
"The greed for revenue has always turned governments towards petroleum products which have now become easy to tax without much backlash. But the situation has denied the consumers of an opportunity to pay for petrol and diesel at almost 2005-06 prices that would have been a big relief for them in this difficult period," said an oil sector analyst, who asked not to be named. 
 
International crude prices are hovering at around $41 a barrel. At similar level of crude prices or a bit higher in the years 2004-05, 2015-16 and 2016-17, the retail price of petrol hovered around Rs35 a litre, Rs60 a litre and Rs65 a litre, respectively. 
 
Diesel prices during these years moved from Rs39 a litre to Rs45 and Rs52 a litre on an average. But the retail price of petrol and diesel on Monday stood at Rs80.43 and Rs80.53 a litre, respectively, in Delhi even though crude is around $41 a barrel. 
 
"Petrol and diesel prices could have fallen to unprecedented low levels in April and May when crude dropped to just about $20 a barrel. But tax increases kept with oil companies did not allow to raise retail prices, and kept consumers from savouring the benefit of low fuel prices," the analyst quoted earlier said. 
 
Even though the Centre and state governments raised taxes on the two petroleum products, oil companies were asked not to raise the retail prices since March 14. So when, oil companies were given a go ahead and they stared daily price revision, petrol and diesel prices went up on 22 of the 23 days since June 7 by over Rs11 per litre even though during this period global oil market remained fairly stable with crude hovering between $40 and $42 a barrel. 
 
Taxes on petroleum products and its non-inclusion into the GST fold is the prime reason why it has become the milking cow for governments for any exigencies. Picture this, the base price of both petrol and diesel is around Rs22 per litre, but the retail price is Rs80 a litre, meaning that taxes account for more than 200% of the price of the product. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    mukul.audguy

    5 days ago

    In my opinion, Government isn't a for-profit institution wherein greed motivates them to take certain steps to enhance revenues. Fiscal deficit is already expected to be 10-20% of GDP, and borrowing indiscriminately from the future isn't always the best step to take. Oil is perfectly placed to be taxed higher to make-up for the revenue shortfall, especially now that the crude prices are historically low. And the end-product prices aren't over-the-top that they'll impact consumption.

    Ramesh Popat

    5 days ago

    True! but in the overall present situation, it is not too bad!
    inflation may be imminent but inevitable evil! marta kya nahi
    karta! economy and survival is supreme!

    India bans 59 Chinese apps over national security concerns
    The Indian government on Monday banned nearly 59 Chinese apps including TikTok, WeChat and UC Browser and Xiaomi's Mi Community over national security concerns as India-China bilateral relations remain strained after the death of 20 Indian soldiers in the Galwan Valley clash with Chinese PLA troops in eastern Ladakh.
     
    The Ministry of Electronics and Information Technology (MeitY) has issued a list of 59 Chinese apps that are now banned in the country.
     
    "These measures have been undertaken since there is credible information that these apps are engaged in activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order," said a MeitY statement.
     
    The ministry received complaints from various sources including several reports about misuse of some mobile apps available on Android and iOS platforms for stealing and surreptitiously transmitting users' data in an unauthorised manner to servers which have locations outside India.
     
    "The compilation of these data, its mining and profiling by elements hostile to national security and defence of India, which ultimately impinges upon the sovereignty and integrity of India, is a matter of very deep and immediate concern which requires emergency measures," the statement read.
     
     
    The MeitY said the move will safeguard the interests of crores of Indian mobile users.
     
    "There have been raging concerns on aspects relating to data security and safeguarding the privacy of 130 crore Indians. It has been noted recently that such concerns also pose a threat to sovereignty and security of our country," said the government.
     
    Other Chinese apps in the banned list are Club Factory, SHAREit, Likee, Mi Video Call (Xiaomi), Weibo, Baidu, Bigo Live and more.
     
    Earlier this month, Indian intelligence agencies red flagged these Chinese apps over safety and privacy issues of users.
     
    The government needs to either block access to these apps or advise people to stop their use, according to the intel inputs, said the agencies.
     
    The report comes amid growing chorus from Indian activists to boycott Chinese products due to the border tensions between the two countries in Ladakh.
     
    The recommendations of the intelligence agencies have backing of the National Security Council Secretariat which determined that certain China-linked applications could be detrimental to the country's security, said the report citing an unnamed government official.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    Maharashtra Extends Lock-down till 31 July
    The Maharashtra government on Monday announced that it has extended the lock-down till 31st July in view of the steadily increasing COVID-19 cases in the state.
     
    While all existing lockdown conditions will continue, the government will gradually ease restrictions over the next month.
     
    All visits outdoors, barring for essentials or for specified employment purposes will remain banned during this period.
     
    Since the past three days, the state has been recording 5,000-plus COVID-19 cases daily, taking its tally to 164,626, and there have been 7,429 deaths till date.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone