Union Governments have regularly reiterated its commitment to deregulate the prices of petrol and diesel.
But the deregulation of fuel prices is being a hindrance to consumers benefiting from low global prices.
What is government’s stand on fuel price deregulation?
Deregulation meant that consumers would pay the actual price of petrol or diesel with no cushion against global price spikes, this happened in 2008 when prices touched nearly $150 a barrel.
In June 2010 when petrol prices were freed government permitted oil marketing companies (OMCs) to revise prices based on international crude oil prices every fortnight.
From January 2013, diesel prices were raised by 50 paise per litre every month and fully deregulated in 2014.
In June 2017, OMCs began tweaking fuel prices every day in tandem with global trends.
How fuel pricing concerns the customers?
As a corollary of deregulation consumers were to gain if global oil prices fell but this is not happening in practice.
Since November 2014, central excise duty on diesel and petrol has been steadily increased through over half-a-dozen revisions.
Since 2015-16, the Centre has been raising nearly Rs.2.5 lakh crore annually through these higher duties.
States also levy value added tax at rates as high as 40 per cent, the only reduction in excise duty was made last October a meagre Rs.2 per litre.
What are the reasons of higher pricing of fuel?
Budget 2018-19 abolished the Rs.6 per litre additional excise duty on petrol and diesel and cut the basic excise duty by Rs.2 per litre only to swap that with a road and infrastructure cess of Rs.8 per litre.
This move is taken to lower the subsidy burden and ease the pressure on India’s fiscal deficit.
The petroleum ministry argues that taxes are being raised when prices are low in order to protect consumers when prices go up.
Government also justifies higher taxes on petrol and diesel given their impact on the environment.
