Petro prices: Time for putting heads together

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The price of petrol has long breached Rs 100/litre mark and diesel now too has crossed that psychological level. Diesel is the fuel on which the Indian economy moves and the retail inflation figures in May that shocked almost everyone by climbing to 6.3% — well above the Reserve Bank’s upper ceiling of the tolerance band of 6% — ominously indicates that petro-inflation was one of the villains. For years, enough has been discussed on the impact of petroleum prices on the economy and the common man. It is a well-known fact that petrol and diesel are taxed the most in India. The point is to end the discussion overload and act now.

In March, the Lok Sabha was told that the Centre’s tax collections from this source went up by 300% in the past six years. The share of the states is not negligible in any way. Though each state is free to choose its own rate of taxation, it ranges between 25% and 30% and in some states goes even higher.

It is true that the Centre is spending substantial revenue now on welfare schemes to support poor people during the pandemic and some of this revenue comes from petrol and diesel. But if fuel prices stoke inflation, it becomes pointless trying to put money into the hands of the poor since inflation erodes the purchasing power of the money in his pocket. A vast number of people, who are precariously positioned in the lower middle class, who do not get any free food grain or support of welfare scheme are severely impacted by rising inflation.

All governments in this country have used petrol and diesel for filling the exchequer as low-hanging fruits. It is time for all governments to put their heads together and devise a way of earning revenues from other sources too. It is time to act. Fresh rounds of political blame game will only compound the problem.