FUEL MANTRA: CHEAT & LOOT

There is no let-up in the cheating and looting in the garb of petrol and diesel hike – a direct fallout of more than 50 percent tax levied on the two fuels.

According to one estimate, excise duty on petrol has gone up by 105.49 per cent while on diesel it has shot up by over 240 per cent. Interestingly, the only time duties were cut was by Rs 2 per litre last October in the run-up to the assembly elections in Gujarat. As against this, the excise on jet fuel as a component of price was just 14%.

The extent of ‘loot’ can also be gauged from the fact that on petrol the Narendra Modi-led NDA government collects Rs 10 per litre excise duty more than what the Manmohan Singh-led UPA government was collecting in 2014. On diesel, the government collects almost Rs 11 per litre more than the previous government.

When the global oil prices were down, the government had not passed on the benefit to the consumer; rather, it hiked excise duty on fuel nine times between November 2014 and January 2016, which was nothing short of ‘cheating.’

Result: The BJP government now has the dubious distinction of overtaking the UPA regime in petrol prices, which have touched a historic high in New Delhi and Mumbai at Rs 76.57 and Rs 84.40 per litre, respectively.

The gap between petrol and diesel prices has also narrowed to such an extent that it no longer makes sense to buy a diesel vehicle. Diesel set a new record across the country on Monday: In Delhi, Kolkata, Mumbai and Chennai, diesel was selling at Rs 67.82, Rs 70.37, Rs 72.21 and Rs 71.59 per litre, respectively. The carriers of public transport run mostly on diesel and the impact on inter-state movement of perishable and imperishable commodities can well be imagined.

With price of global crude going through the roof, the only way to scale down prices is a reduction in taxes. But, for a long time, the Centre has been conveniently taking the plea that states need to bring down their own taxes to make the fuels cheaper. But it is apparent the states are not willing to oblige given the booty that flows into their coffers. Kerala Finance Minister Thomas Issac has suggested a simple solution to bring down the raging petrol prices to Rs 60 a litre. “Let the central government give up the 300 percent tax increase they imposed since BJP came to power.’’

The saddest aspect is that the government could well have reined in the prices by cutting excise but it missed the bus when the prices were down. Now, the fiscal situation is such that it does not permit any such generosity. And certainly not in the run-up to the general election. The BJP government is surely in a trap, unless it takes a bold step like reducing the GST.

The oddity is that countries which buy petrol from India are selling it at a price lower than India.