Image Credit: Indian Express
India
Four States Slash Taxes Amid Skyrocketing Fuel Prices
|On Saturday, February 20, Finance minister Nirmala Sitharaman said the situation presented "dharm sankat (dilemma)" for the government.
Amid spiralling fuel prices, four states have taken the lead to cut taxes to provide relief to consumers.
West Bengal became the latest state to join the band on Sunday, February 21, by reducing Value Added Tax (VAT) by ₹ 1 on petrol and diesel. Rajasthan was the first one to reduce the VAT from 38% to 36% on January 29.
Assam also followed the suit on February 12 by withdrawing an additional tax of ₹ 5 imposed last year. The state had done this to fund the fight against the COVID-19 pandemic, reported The Times of India.
The state of Meghalaya has given the biggest relief to consumers by cutting ₹ 7.4 per litre on petrol and ₹ 7.1 on Diesel. It has also cut VAT on petrol and diesel by ₹ 2.
The centre so far has refused to cut excise duty which it had cumulatively raised by ₹ 13 a litre on petrol and ₹ 16 on diesel between March and May 2020. This was the time when the country's crude purchase cost fell to $19.9 per barrel as the pandemic shut down economies.
On Saturday, February 20, Finance minister Nirmala Sitharaman said the situation presented "dharm sankat (dilemma)" for the government, while Oil minister Dharmendra Pradhan blamed the oil-producing countries for their less production.
"There are two main reasons for the fuel price rise. The international market has reduced fuel production and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer," Pradhan said on Sunday.
Fuel prices touched new highs on Saturday in metros and remained unchanged since then. As per the latest price, petrol and diesel in Delhi cost Rs 90.58 and Rs 80.97 a litre, respectively, while the prices stood at Rs 97 and Rs 88.60 per litre in Mumbai. In February, petrol prices have gone up by Rs 4.29 per litre and diesel by Rs 4.31 per litre in Delhi so far.
Why are fuel prices increasing in India?
The fuel prices in India are dependent on international market rates. If the rates are increased in international markets, then the corresponding increase will be seen in India.
Due to the fall in demand as a result of the COVID-19 pandemic, Crude oil prices had collapsed in April last year. However, the rates were increased to USD 63.49 for Brent crude from USD 40 soon after a vaccine rollout.
During the same period, Saudi Arabia, one of the key exporters of crude oil, also reduced its daily output by one million barrels to boost oil prices in the international markets to recover from the losses of the pandemic.
Addressing the Rajya Sabha, the oil minister also had said that the centre and states depend heavily on collections from taxes on crude oil to meet their "developmental and welfare priorities."