- The ill-effects of the pandemic on the economy of the countries have been done to death. Reiterating the ominous fallouts and extreme adversities will further exacerbate the hardships of millions who continue to reel under the impact. Knowing that the situation will not alter in the foreseeable future only adds to the misery experienced by all concerned. Coming on top of the inflationary trends witnessed across the country is the worrying rise in fuel prices which appears headed north steadily and might as well reach the Himalayas if the trend sustains for some more time. Make no mistake, it is a double whammy to the battered public who are gasping for breath.
PC: economic times
- The Union Finance Minster’s response, when asked for the rising fuel prices, was cryptic, I am in Dharam Sankat i.e. dilemma that might fail to assuage the aggrieved people who look forward to hearing reassuring understanding from the authorities. Any ordinary layman would be able to comprehend what is happening around vis-à-vis pressure on livelihood compounded by the inflationary rise on several commodities. Fuel is one of the most used input products which caters to the basic need of the common man’s living and price rise beyond acceptable norms would not only pinch limited earning capabilities considerably but also siphon off meager savings as well.
- In this backdrop, what is the use of announcing stimulus packages on the one hand and exhorting people to embrace Atmanirbhar Bharat on the other hand when the Union Government looks another way as the price of petrol crosses Rupees One Hundred per liter in many parts of the country? The most affected strata of the society will be the lower middle class and poor who will be feeling the heat because of the spiraling fuel prices. How can it be expected to resume economic activities full throttle when precious little actions are initiated against the increasing fuel costs? Simply defies logic while leaving the people to fend for themselves.
PC: economic times
- Note that the RBI’s monetary policy committee at the beginning of the month had a suggestion for Centre and State Governments for an unwinding of high indirect taxes on petrol and diesel. This was necessary to limit the buildup of cost pressures in the economy. As is known, taxes are the primary reason for the record highs in the retail price of petrol and diesel breaching the forbidden mark. The Indian basket of crude cost is trading at $62 a barrel presently, at least a 25% increase since the end of the last year. Of course, the real picture emerges when the retail price is subdivided to clearly understand why the fuel price is so high.
- Yes, the taxes and dealer commissions constitute major portions of the retail price wherein the Centre’s tax alone is pegged at 55% to 65% of the price. Don’t be surprised to note that the Centre’s tax is higher than the base price of petrol. Of course, the State governments too are levying taxes to inflate the retail price to unmanageable levels. Few states have reduced their share of the taxes to ease the pressure on the common man but that is proving to be insufficient. Unmistakably, such a tax policy would grossly undermine economic growth as fuel is input in many sectors. There is no way but to lower taxes by the Governments before growth prospects take a severe beating.