New Delhi: Acknowledging that fuel price inflation in India, among the highest in the world and region, is among the most serious problems in the country, the Modi government has made a token reduction of Rs 2 per litre in the price of both petrol and diesel.
Criticised for not passing on the unprecedented price reductions in the price of global crude which the past ten years of the Modi government saw, plus record amounts of excise and cess, not shared with states, the Union government hopes that it can buck some amount of anti-incumbency of ten years with the reduction in oil prices.
Hardeep Singh Puri deployed the photograph of PM Modi and cited poet Ramdhari Singh Dinkar, “Who became the leader of Vasudha? Who won the plot? Who became the buyer of unmatched fame? Who was the pioneer of a new religion? who never rested, Made a name by living amidst obstacles.”
He said that “these lines of the poem written by great poet Ramdhari Singh Dinkar ji show the commitment of Prime Minister Narendra Modi towards his family.”
Important Questions Over Fuel Pricing
An analysis in September 2023 revealed that the tax component in these prices has been a major source of revenue for the Union government. Taxes on oil and petroleum products form a major part of the retail prices borne by the consumers.
“To take the example of Delhi, of the current retail price of petrol (Rs 96.72) and diesel (Rs 89.62), excise and VAT take up 36% and 31% of the prices, respectively. At the height of rising energy prices in late October 2021, this share used to be 54% and 49%, respectively. Of this, central excise duties held a larger share than that of the state government’s VAT, which was calculated on a percentage basis.”
Some key questions that emerge and still await answers as the government still keeps managing the price of fuel to tally with the election cycle.
- As it enters the 2024 election cycle with key issues of low growth, high inflation and low employment are: How did the Union government profit by the windfall gain realised in the crude oil price import bill when global oil prices came down and the Indian government imported cheaper Russian crude oil (while justifying doing so for consumer-cost benefit reasons)?
- To what extent has the government allowed oil, gas, petroleum and petrochemical companies to profit as they gained from the cheaper crude oil price import cost without passing on the benefit in terms of price-reduction to consumers?
The government had similarly attempted to talk up the reduction of the price of LPG cylinders by Rs 100 as a “gift” from Modi, but like the Rakhi gift of Rs 200, it just drew attention to the extent of price rise in the past decade. The price of LPG in 2014, as per government’s own data given to Parliament was Rs 414 and is now over Rs 900.
