The rise of fuel price and the possible solutions and troubled future
On Saturday, the fuel price touched the all-time high since 2013, and it cannot be good news for both Modi led BJP government, and the citizen for the obvious reason as the anger among them is increasing due to its on-going hike. Though the government may show the reason for the uncertainty of US exit from Iran’s nuclear deal and shrinking supplies from Venezuela, but they are forgetting that five years ago it was 40% costlier before tax when crossed 76. The taxes on petroleum increases 117 percent after the NDA government assumed power in 2014 and the government earns 2.7 lakh crore whereas before 2014 it was 1.3 lakh crore. Though the rising price reminds us the famous statement by the current government during the pre-2014 campaign on social media where they repeatedly motivate the people by saying “May your happiness increase like the petrol price and may your sorrow decrease like Indian rupee”. We wish it could be true but the current scenario is saying the exact opposite as the government is yet to find any fruitful solution without affecting its revenue. Before the General Election, for one liter, the average price was 76 rupees with central tax 9.48 whereas the current tax rate is 19.48 rupees which are 105% higher, though here we exclude the state tax and commission and will talk about the center only. However, petroleum minister assured to ease the problem as soon as possible and will come out with some working solution, but as per the chairman of Indian Oil Corporation, there is no direction from the government to reduce the price. Though no one knows what will be the plan to control such high price but the future will be tough for both the government and companies as the fuel retailers are taking the low margin, and companies can’t continue in low price for a long period unless the government takes some tough stand on it to fix. In case it decides to control the price here are two possible solutions.
- If they decide to include GST 28 percent or even high 40 percent which is meant for the luxury goods though it is a necessity and doesn’t come under luxury items, and will again make controversy which can become a headache for the government again.
- The second option can be possible if both the state and center will agree to reduce the excise charge and VAT respectively but for every one rupees reduction per liter will cost 13000 crores annual loss that both parties are unable or we can say are not interested to bear this.
If the situation is not enough then the rise of price in the International market will make it worse by adding extra $10 per barrel that ultimately slows the growth by 0.2 percent and wholesale price index inflation by 1.7 percent and according to Ministry of Petroleum and Natural Gas, the government have to shell out $30 billion to purchase the same amount of crude oil as it did in last year. The rising of price makes the situation more tough for the government in both politically and administratively and as per the general election is a concern, if it fails to find the fruitful solution, then the situation would be suicidal for both the economy and ruling party. The assurance from both the Petroleum minister Dharmendra Pradhan and BJP president Amit Shah could make a relief for the common citizen and however, we are not expecting any magic pills still hope for the best if they can able to resolve the burden on the citizens’ pocket.