Cut in Petrol/Diesel Prices - Are You Joking Mr Jaitley?

Petrol and diesel prices will be reduced by Rs.2.50 per litre each, Finance Minister Arun Jaitley announced at a press conference on Thursday  in Delhi. He urged states to match this with a similar Rs.2.50 cut in their share of taxes. So far, Kerala and Delhi have refused to do so, while six BJP-ruled states have agreed.

Have a look at the charts below – it shows the great cut in prices in perspective. These are based on daily data maintained by the Petroleum Planning & Analysis Cell (PPAC) under the oil ministry.

Last year, the government switched over to daily price fixing of these two fuels. At that time, petrol was being sold at Rs.65.48 per litre and diesel at Rs.54.32/litre.

On October 4, after the Rs.2.50 cut, the rates are: petrol – Rs.81.50 and diesel Rs.72.95 per litre! In other words they are about 24% higher than they were in June 2017. The great cut announced by Mr.Jaitley amounts to a measly 3% of the cost it was selling at.

India’s retail oil prices are made up of the cost at which oil is imported plus excise, VAT and dealers’ commission. As per Indian Oil Corporation, on October1,  2018, the price being charged to dealers was Rs.42.79 per litre of petrol and Rs.46.22 per litre of diesel. The rest of it is all taxes, with a small amount (Rs.3.66 for petrol and Rs.2.52 for diesel) going as dealers’ commission.

In other words, it is the government. which has been reaping enormous profits from the sale of petrol and diesel. It is estimated by PPAC that in 2017-18, the petroleum sector contributed a staggering Rs.3.44 lakh crore to the Centre’s treasury through these taxes and dividends. The contribution to state exchequers was another Rs.2.09 lakh crore. The total amount is a mind boggling Rs.5.5 lakh crore – all through jacking up prices of petrol and diesel even though international prices were low.

The Modi government has failed to raise resources by taxing the rich. It has allowed corporate bodies to abscond with lakhs of crore rupees worth of bank loans. It has sold national assets to private entities. It has privatised various services to benefit them. Yet when it comes to giving some relief to the common persons, it has been callously obstinate, refusing any cuts in prices of essential commodities like oil.

And, now Mr. Jaitley announces a cut of Rs.2.50 as if it is a great concession and relief to the public. You must be joking Mr.Jaitley, right?