(MENAFN- NewsBytes)
Amid widespread criticism, government assures solution to rising fuel prices
22 May 2018
The Center is facing flak from all sides even as fuel prices, which have been rising continuously since the Karnataka elections, touched new highs.
Yesterday, petrol was selling at Rs. 76.57/L and 84.40/L in Delhi and Mumbai respectively.
If the PM can control fuel prices "for own interest" ahead of polls, why couldn't he do it at other times "in public interest," questioned Congress spokesperson Jaiveer Shergill.
Why are fuel prices going up?
Rise
Petrol and diesel prices in India are determined by global crude oil prices and rupee-dollar forex rate.
For the first time since November'14, global prices have climbed to $80 per barrel on the back of increasing demand and production cuts by the Organization of Petroleum Exporting Countries.
US sanctions on Iran, one of the biggest oil producers in the Middle East, has compounded the problem.
What does the 'PM controlling fuel prices during polls' mean?
Suspension
The Indian Oil Corporation's dynamic pricing system had been put on a 19-day hold ahead of the Karnataka elections on May 12.
During this period, oil PSUs are estimated to have lost Rs. 500cr.
Dynamic pricing came back into force two days later.
Since then, prices have risen every day as PSUs passed on weeks of relentless rise in international oil prices to consumers.
Everyone except the common man enjoying benefits of rising prices
Fact
Compared to UPA, NDA gets Rs. 10/L more excise-duty on petrol and Rs. 11/L on diesel. States get VATs: Delhi's earnings rose 31% on petrol and 44% on diesel. Even commission of pump-owners rose by 80% on petrol and 111% on diesel during April'14-March'18.
Opposition lashes out at the government over deteriorating situation
Reax
The opposition has lashed out at the government over temporary suspension of dynamic pricing.
"Why was (the system) stopped then, and why resumed, we have no explanation. So just fool the people, speak of 'no govt-regulation' of (oil) price, then only cynical manipulation till polls," tweeted CPM's Sitaram Yechury.
"Modi Govt continues to fleece Indians," Congress said.
JD(U)'s Sharad Yadav called the government "anti-people."
Minister assures reduction in net impact, hinting at duty cuts
Government
Petroleum Minister Dharmendra Pradhan has now said the government will "reduce net impact by Rs.2.50 and Rs.2.35," hinting at cuts in duties.
He added that "states should take responsibility to reduce VAT, which goes into their account...Even if they reduce VAT by 5%, consumers will benefit."
"Unless swift action is taken, economic growth will again head towards a speed-breaker," said FICCI president Rashesh Shah.
Bringing petrol, diesel under GST will keep prices in check
Solution
There is widespread demand for bringing fuel prices under GST, which will remove taxes like excise duty and VAT.
Even at the highest slab of 28% on base price (Rs. 38 for petrol and Rs. 35.59 for diesel), it would keep prices below Rs. 50.
However, it would mean a tremendous revenue loss for both the Center and states. Discussions on this issue continue.
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