Saroj Kumar
In the last eight years, the government has collected more than twenty six and a half lakh crore rupees from the general public as tax on petrol and diesel. Today, when the people are in trouble, it is the turn of the government to show generosity. But alas, there is no such sign as of now. However, the price of natural gas has also been increased, which is a blow to injury.
Based on the international market, the daily increase in the prices of petrol and diesel may not be unexpected, but the impact of this endless increase on the domestic market is unpredictable. Fuel prices have now started burning their pockets and liver by overcoming the idiom of inflation. Common man is getting burnt by its fire. The flames of this fire are engulfing the country’s economy as well, but we have neither any preparation nor any effort is visible to extinguish it. This style of the alumbardars on the flame of fuel is scary.
After a pause of one hundred and thirty seven days, the prices of petrol and diesel once again started increasing on a daily basis from March 22. Prices were increasing earlier also, but after the increase of November 2, 2021, the government reduced the central tax on petrol and diesel by Rs 5 and Rs 10 respectively on November 4, 2021 under public pressure. But within fifteen days of resuming the daily price hike, this cut became redundant and now the price has gone beyond the threshold of November 4, 2022.
If the international market is the basis for the increase in fuel prices, then why did the prices not rise for one hundred and thirty-seven days? The answer to this question is not with the oil companies. Whereas during this time the price of crude oil in the international market continued to rise and reached one hundred and twenty dollars per barrel. According to rating agency Moody’s, the oil companies- IOC, BPCL and HPCL suffered a total loss of nineteen thousand crores during these one hundred and thirty-seven days. Now this loss is being compensated by increasing the price daily. The question arises that when the loss was to be compensated by the general public, then what is the meaning of fasting for one hundred and thirty seven days? But the meaning was actually related to the assembly elections of five states.
Everyone was apprehensive that the prices of petrol and diesel would increase after the assembly elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur were over. Because the price of crude oil was going up rapidly in the international market. In a period of fifteen days from November 4, 2021 to April 5, 2022, the price of crude oil has increased by about twenty eight decimal four per barrel. The global situation is also such that the price of crude oil is not going to come down in the near future. If the Russia-Ukraine crisis is not resolved soon, the price will go up.
Due to increase of one dollar per barrel of crude oil, the retail prices of petrol and diesel at domestic level increase by fifty-two to sixty paise per liter. Accordingly, if the average price of crude oil remains at one hundred eight to one hundred and ten dollars per barrel, even then the price of petrol and diesel can increase by about five and a half rupees to seven and a half rupees. As much as the direct effect of high prices of petrol and diesel, the indirect effect is not less than that. According to an estimate, the operating cost of transport has increased by about twenty five per cent due to the steep increase in the price of diesel in fifteen days. The general public also has to compensate for this. The cost of cultivation has also increased due to expensive diesel, due to which the condition of the farmers will further worsen.
High prices of petrol and diesel are no less worrying for the government. When the entire economy is dependent on fuel, cheap and smooth supply of fuel is essential to sustain it. India imports eighty-five percent of its fuel consumption. Therefore, instead of giving energy to the economy, expensive fuel will only set it on fire. If the demand in the market falls due to inflation, the tax revenue of the government will also decrease.
Its impact will be on social, economic, political and all kinds of plans. The fiscal deficit will widen, which is already at 6.9 per cent of GDP (FY 2021-22), and is projected to remain at 6.4 per cent in the new financial year (2022-23). The country’s credibility gets dented due to the increase in fiscal deficit. Foreign investment gets affected, rupee depreciates. As a result the import bill increases. Unemployment and inflation rise. That is, messing up the arithmetic of one fuel messes up the algebra of the whole earth cycle.
The only way to save the economy from getting caught in the vicious circle is to stop the increase in the retail prices of petrol and diesel. For this, while on the one hand there is a need to make strategic, diplomatic efforts for smooth supply of crude oil from oil producing countries at reasonable rates, as was done to get Russian crude oil despite sanctions, on the other hand heavy excise duty in Cutting is also the need of the hour. Even after the deduction of November 4, 2021, the central tax on petrol and diesel is higher by Rs 8 and Rs 6 per liter respectively from the level before the pandemic.
While this part of central tax should be withdrawn immediately, further additional deduction also needs to be considered. The practice of daily price hike may also be suspended till the situation becomes favourable. In the last eight years, the government has collected more than twenty six and a half lakh crore rupees from the general public as tax on petrol and diesel. Today, when the people are in trouble, it is the turn of the government to show generosity. But alas, there is no such sign as of now. However, the price of natural gas has also been increased, which is a blow to injury.
From April 1, the price of natural gas has been doubled. The general public also has to compensate for this. Natural gas is used to generate electricity, make manure, CNG and PNG for household cooking. The price of gas from the old gas field of state-owned Oil and Natural Gas Corporation (ONGC) has been raised from $2.90 per metric million British thermal units (mmBtu) to $6.10 per mmBtu. While the price of gas produced from new gas fields (KG-D6 block) controlled by the private sector has been increased from $6.13 per mmBtu to $9.92 per mmBtu.
According to the data of the Petroleum Planning and Analysis Cell of the Ministry of Petroleum and Natural Gas, at present (FY 2021-22) the country has a total consumption of sixty nine thousand six hundred and eleven million standard cubic meters (MMSCM) of natural gas, out of which twenty nine thousand two Hundred and ninety nine MMSCM of gas is imported as LNG (Liquefied Natural Gas). The government fixes the price of natural gas twice a year, on April 1 and October 1, based on gas prices in gas-rich countries such as the US, Canada and Russia.
In the current global situation, the price of natural gas is on the rise. The latest increase in the price of natural gas is expected to increase the retail prices of CNG and PNG by 10 to 15 per cent. Due to this, while the ride of a CNG vehicle will be expensive, on the other hand, the budget of the kitchen will also deteriorate. Expensive gas will also affect the cost of fertilizers and electricity, the cost of which will have to be paid by the general public in the coming days.