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HomeEconomyPetrol prices: Within surging prices and consumer dissatisfaction! What lies ahead?

Petrol prices: Within surging prices and consumer dissatisfaction! What lies ahead?

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Highly valued in the market, also known as ‘Liquid Gold’. Yes! We are talking about Petrol, a yellowish-black highly flammable liquid made from a mixture of refined petroleum and natural gas by products, the component that makes your car run.

In India, the oil and gas industry began at 1889 after the first oil deposits were discovered near the town of Digboi, Assam. While India is a producer of petrol, the consumption graph has always been higher than that of the production, due to which India has to import huge quantities of the rare oil. According to statistics, in 1950- 1951, India produced only 2.7 lakh tonnes of oil against the consumption of 34 lakh tonnes.

Petrol prices are revised on a daily basis at 6:00 a.m in India. Since, the price of any kind of fuel includes excise duty, value added tax (VAT) and dealer commission, the daily update makes sure that every variation in global oil rates can be channeled to all the fuel users and dealers. From data analysis, a significant fluctuation of petrol prices can be noticed in the big four metropolitan cities in India, i.e. Chennai, Mumbai, Kolkata and Delhi. Petrol prices of these metropolitan cities in 2003 were Rs. 35.48, Rs. 37.25, Rs. 34, Rs. 32.49 respectively. These rates constantly increased till 2006 and then dipped. Then began the steep rise in the rates from 2011 to 2021.

India has always witnessed a never ending argument between the citizens and the government regarding petrol prices. While citizens always express their discontentment about the huge taxes and forever rising petrol rates, the government urges that such taxation is essential for fund growth and overall operation. Local taxes like VAT and freight charges play a huge role in fuel prices, which is one the main reason of difference in fuel prices across the Indian states. While Andaman and Nicobar Islands levies the lowest rate on petrol, Mumbai has the highest VAT of 39.12 per cent. On top of that, the center also levies excise duty on petrol, which is one of the main reasons behind fuel price hike. Other factors like international market, global fuel prices, rupee to US dollar exchange rate and demand for fuel also play a role in the fluctuating rates.

From cars to bikes, the Indian population is heavily dependent on petrol and hence the price fluctuations affect the whole population at large. While both the central and state governments have massively profited from taxes, it is the middle class public and those at the margins of the society who are having to carry the burden of the unprecedented price hikes. Hence, the public either wants the state governments to reduce the petrol rates or levy an absolute value of the value added tax instead of a percentage of the base price. Finance Minister Nirmala Sitharaman however suggests that the solution may lie in bringing petrol under Goods and Service Tax scheme, which according to her will bring uniformity in the ever fluctuating petrol rates.

Visuals by: Rahul Haloi

Article by Dipakshi Goswami, The North-Eastern Chronicle

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