Dharmendra Pradhan blames weak Rupee for exorbitant petrol and diesel prices

Javier Stokes
May 28, 2018

"The political difference between two oil producing countries Iran and Venezuela has been a major cause behind the rise in the price of fuel in the worldwide market".

For the eleventh straight day on Thursday, petrol prices have increased higher by 30 paise while diesel has also scaled to a new high by surging 19 paise today. Oil producers get paid worldwide rates for the oil they produce from domestic fields.

During that time more than 8ppl has been added to the average price at their pumps, analysis of RAC Fuel Watch data reveals.

The incessant rise in petrol and diesel prices has been mostly due to rise in crude oil prices and the high excise duty levied on transportation fuel. The government needs to provide relief to consumers, complaining not only of higher crude prices but also significantly higher taxes. Though UPA lost elections on several other issues in 2014, its inability to control fuel prices played a big role. When global crude oil price was declining between November 2014 to February 2016, the government had raised excise duty on petrol and diesel by nine times to boost its revenue.

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The government has set $70 as the upper limit for triggering the windfall tax and the tax, which may come in form of a cess, and will take effect the moment ONGC starts selling oil at prices above $70 per barrel, reports quoting sources privy to the development said. The Indian government benefited from falling crude prices since November 2014 and shore up its finances by hiking excise duty on fuel nine times between November 2014 and January 2016.

Five years ago during the UPA government the crude prices were 40 per cent costlier than subsequent years.

Two main factors are responsible for the fuel price hike: the rise in oil prices to over $80 a barrel, and the unfavourable pound/dollar exchange rate. The Central tax on diesel has increased more than three-fold while the tax on petrol has doubled. We have advocated for bringing petroleum products under Goods and Services Tax (GST).

'The supermarkets are being very quick to pass on increases in the wholesale price - they are far faster at passing on rises than falls.

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