Petrol Prices

All over India there is hue and cry about rising petrol prices, which is about Rs 75.00 per Litre in Delhi and Rs83.oo in Mumbai. There are certain facts about Petrol prices, which most of the countrymen are unaware. The first and foremost is the price of petroleum products are not governed by  Central Govt, but are controlled by Oil Companies, but both Central and state govts levy taxes on the petroleum products, which increases the price. When the GST was introduced, the petroleum products were not brought under GST ambit, because even with max rate of GST and Centre and States sharing equally the GST amount, the states were loosing on this account. So no state govt agreed to bring petroleum products under GST ambit.

Now other facts about the Petrol prices are ( The price of petrol given in the details given below, are the prices prevailing in Delhi market at that time)

1. In 2004, price was around Rs 34 per litre.
2. In 2014 price was about Rs 72 per litre.
3. It means during the UPA rule of 10 years, the price of petrol went up by Rs 38 per litre.
4. Additionally UPA govt left the debt or Rs 43,000 Cr, which was to be paid to Iraq govt. You all will recall that during Iraq crisis( Saddam Hussein time) there was sanction on Iraq that they can sell their oil produce, but buyer country was to defer payment till the crisis is resolved. So UPA govt conveniently left the debt for NDA govt.
5. So when NDA govt took over, the price of petrol was Rs 72.50 per litre.
6. Now in 2018, the price is about Rs 75 per litre, so in 4 years price went up by Rs 2.50 per litre, compare to this during the rule of 10 years of UPA govt when the price went up by Rs 38 per litre.
7.  During the period of 4 years NDA govt has made the payment of Rs 30,000 Cr to Iraq also, from the debt of Rs 43,000 Cr left by UPA govt.
8. UPA govt never made public that there is debt of Rs 43,000 Cr, even parliament was not aware of this amount, can UPA govt  explain how even after getting free oil worth Rs 43,000 Cr, the price of petrol went on increasing.
9. Now people will say that compare the price of crude oil over the years, then compare the retail prices.  Presently crude 0il price is not very high, so the price of petroleum product should come down. Earlier the prices were governed by the govt and   depending upon the crude oil prices , the central govt was adjusting the import duty and central excise duty component so that there is no sharp rise in the market. But later the petroleum products were brought under free economy, and now it is  oil companies who control the pricing, and both central & State govt collect there taxes and duties.
10.  So if the petrol, diesel and other petroleum products are brought under GST ambit, definitely there will be reduction in prices. But will the state govts, specially ruled by opposition parties, ever agree. At the moment there is even reluctance from the state govts ruled by BJP and their alliance partners.
11. The rate of petrol can come down by at least Rs 25 per litre, but how will Central and State govts offset this loss in revenue. It may happen that with GST in picture petrol  price will come down but both Central & State govts  will be left with no option but to agree to increase in the GST rates of some other items to off set this loss. Then again people will make big hue and cry for price increase in other items.

So the govt is under catch 22 situation and it will continue like this only. But one thing is sure that with payment of old debts, and the retail prices controlled by oil companies, the present govt has done reasonably well in maintaining the balance between central & state revenues and oil companies.

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