One of the major problem that motorists in the country are currently facing is the rising fuel prices. Most of the major cities and states have already crossed Rs 100 mark for a litre of petrol. Diesel is right behind petrol and is inching towards triple digit mark. India’s largest fuel retailer Indian Oil Corporation (IOC) has now said that the prices for petrol and diesel may go up even more if the cost of crude oil in global market continues to remain high.
Indian Oil said in a statement, “Retail prices of Petrol and Diesel are also likely to be affected with the surge in international oil prices. During the last ten days itself, international crude oil prices have increased by around $3/bbl. In case international crude oil prices continue to remain at such high levels, increase in retail prices going forward will be inevitable”
Crude oil prices in the global market rose to highest price in the last six weeks. One of the reason for this rise is the Ida Hurricane. It affected the US oil production as the hurricane hit US Gulf coast in last week of August. More than anticipated fall in US crude oil inventories and improving global economy despite pandemic affected the price of crude oil.
The production of crude oil is likely to increase in coming months but, even then the demand for oil is likely to be more than the supply itself. What this means is that the crude oil prices are likely to increase in future. As of now, price for petrol is Rs 101.19 per litre and Rs 88.62 per litre for diesel in National capital.
Last week, there was a meeting in GST council to bring petrol and diesel prices under GST to reduce the retail price. The topic was discussed as per Keral High Court’s order. By including petrol and diesel under GST, the price for petrol and diesel were likely to come down to Rs 75 per litre and Rs 68 per litre respectively. The Goods and Services Tax Council however decided to keep petrol and diesel out of GST and subsuming the current excise duty and VAT into one a uniform rate across the country would impact the revenue.
Many states came forward opposing the move to include petrol and diesel under GST. Former Union Minister of Petroleum and Natural Gas Dharmendra Pradhan had said that he knows the fuel prices are increasing but, he cannot bring them down. He said the government is saving money from petrol prices for welfare schemes.
Union Finance minister, Nirmala Sitharaman also stated that there is no possibility of decreasing the excise duty on fuel prices. She blamed it on the payments in lieu of past subsided fuel prices by the previous governments. She said, “If I did not have the burden to service the oil bonds, I would have been in a position to reduce excise duty on fuel. Previous governments have made our job difficult by issuing oil bonds. Even if I want to do something I am paying through my nose for the oil bonds.” The minister claimed that it is an unfair burden on her as she has to pay a significant amount of interest and principal amount on the oil bonds.