Economy

Government to take a 'long-term' view on fuel pricing: Ravi Shankar Prasad

Government to take a 'long-term' view on fuel pricing: Ravi Shankar Prasad

Rising crude oil prices, expected to increase further over the next six months, and their cascading effect on domestic petrol and diesel prices will make the going harder for the common man, analysts told Firstpost.

Revised petrol prices in Nagpur today on May 25 is 85.57 and 72.04 for diesel.

The reason behind the increasing fuel prices is the increase of the price of crude oil in the global market and the weakening of INR against United States dollars. The central government has formed a task force to act over the issue. The government may soon announce measures to contain the rising fuel prices soon. Petrol and diesel prices were raised for the 11th day in succession today as the state-owned oil firms gradually passed on to the consumer the increased cost of worldwide oil that had accumulated since a 19-day freeze was imposed just before Karnataka elections.

The revisions continued till just before the general elections in 2004 when oil companies went slow and after a Congress-led UPA came to power the entire process was reviewed as the global oil prices started moving up. Another logical inference is that the government will continue to look the other way (or indulge in some window dressing by ordering a minor duty cut) because there are no elections lined up till the year-end. The 11-day relentless price increases built pressure on the government for cutting excise duty to give immediate relief to consumers. If you consider the example of petrol and diesel prices in Delhi today - Rs 76 and Rs 68.08 per litre respectively, the highest recorded ever - petrol prices had last reached the Rs 76 per litre mark on September 14, 2013, when crude oil prices were hovering around $108-$115 per barrel.

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"The government has given us the freedom to revise prices daily". Rates vary from state to state depending on the incidence of local sales tax or VAT.

Last November, the government announced a reduction in petrol price by Nu 10.29 a litre and diesel by Nu 7.75 after the Government of India exempted the levy of excise duty on petrol and diesel. "We believe all petroleum products should come under the goods and services tax (GST)", said Sanjiv Singh, chairman of IOC.

Higher prices are denting popularity of the ruling Bharatiya Janata Party, which face polls in key states later this year and a nationwide election in early 2019. "The Centre has given Maharashtra in last four years what was not given in the last 20 years", he claimed. Currently, petrol is taxed at a little over 100 percent and for diesel, the taxes come at around 66.48 percent.