The price of petroleum-based products in India have soared to a three-year high.
The streets are quiet except for the protests by few small parties. After the daily revision of petrol and diesel prices that commenced on June 16, 2017, the prices have gone up to more than Rs 7 within the last two months. Indian citizens have become one among those Asian countries that will have to pay the highest price for petrol products. While in Malaysia, the price is Rs 36 per litre, it is Rs 45 per litre in Pakistan. But India has to spend more than Rs 73 per litre even in circumstances when the price of refined oil stands below 50 dollars. When the high profile corporate companies and the government suck out little money left in the pockets of common man, it’s due to Modi government giving the oil companies the power to carry out the daily revision of oil price daily starting from June that led to this succumbing without any resistance and even remaining uninformed of the price hike most of the times. The latest developments confirm the fact that the reforms implemented in order to make available the benefits of low crude oil prices in the international market to the people as quickly as possible, was for the oil companies and the government to consume the people’s money.
After Modi government assumed power, the excise duty on petroleum products have been raised nine times. The excise duty on petrol and diesel were Rs 9.48 and Rs 3.56 respectively during the UPA governance. However, the prices have been raised to Rs 21.48 (226 per cent) and Rs 17.33 (486 per cent) a litre respectively by the Modi government. It’s these excess taxes that play the key villain in hiking up the prices. The data available with the oil companies show that if the approximate rate of oil for a barrel is $50, deducting the cost of processing and transportation, then it could be sold to the public for Rs 30 per litre. The oil companies that buy the fuel from refineries for Rs 26.65 a litre, is sold to the dealers at Rs 29.96 a litre without levying any tax including VAT. Despite knowing that the reason for price hike is surely the excess taxes imposed under different names and the companies taking illegal profit, Minister of Petroleum and Natural Gas Dharmendra Pradhan has made clear that the government doesn’t plan to intervene in the affairs of the oil companies to check fuel prices. The Minister’s approach prove the loyalty of the government towards the corporates even during these times of crisis.
The fall in oil prices at the global level will accelerate the internal development process and bolster the country’s economy, particularly in countries like India which imports more than 70 per cent of petroleum products. The sudden price hike will certainly have adverse effects. The Oil Pool Account (OPA) system was a precaution to avoid the unexpected impacts to the economy and its consequences. It evened out the fluctuations in product prices. The system maintained a balance in the fuel prices by providing compensating cash from the OPA when the oil companies endured losses while the surplus went to the funds of the OPA when the global prices fell. It was revoked during the ‘avalanche’ of globalization. The approach mooted by the Congress government of lifting the price control step by step and leaving it completely to the market, was implemented in 2002 by the Vajpayee government. The decision of Modi government to permit the oil companies to carry out a daily revision of fuel prices starting from June 2017 is a completion of that move.
The benefits of price dip could be made available to the people by repealing alone the taxes mercilessly imposed in the law three years. The domestic market would naturally flourish through the move. However, the government would not be able to take such a decision at present. It’s because, the GDP growth witnessed a downfall by two per cent as a consequence of the note-ban. At a time when unemployment is surging up and economic crunch is plaguing the different sectors, the only way left for the government to retain the revenue is certainly the hefty taxes on the fuel prices. Given that the government and their close allies, the corporates who are the beneficiaries of the soaring fuel prices beyond control, its idiotic to believe that the government would intervene in deciding the prices and be the people’s saviours.