The more things change, the more they remain the same for fuel consumers. In March 2020, the crash in international oil prices prompted the NDA government to sharply raise taxes on petroleum products in a bid to garner revenue amid the upheaval caused by the pandemic. Eleven months later, even as the global crude oil prices have firmed on the back of improving demand outlook in view of the worldwide rollout of Covid-19 vaccines, the Centre has ruled out any immediate move to reduce taxes. Oil Minister Dharmendra Pradhan has stated that retail pump rates are governed by international prices as India is 85 per cent dependent on imports for meeting its needs. However, the fact remains that Central and state taxes account for around 60 per cent of the retail prices. Adding to the consumers’ woes, the Union Budget has included petrol and diesel among the products on which a new agriculture infrastructure and development cess is being levied.
Though fuel prices are also rising in neighbouring countries such as Pakistan and Nepal, the relatively higher rates in India have given the Opposition time-tested ammunition to target the government during the ongoing Budget session of Parliament. On Wednesday, Samajwadi Party MP Vishambhar Prasad Nishad tauntingly asked the Centre why the prices of fuel were higher in the country of Lord Ram than in Sita’s Nepal and Ravana’s Lanka. Indeed, there have been reports in recent years of cheaper fuel being smuggled from Nepal into India across the border by unscrupulous elements out to make the most of the price difference.
The widely shared image of Atal Bihari Vajpayee arriving at Parliament on a bullock cart back in 1973 reminds us that fuel price hike is a perennial issue that never fails to strike a chord with the masses. With petrol and diesel rates skyrocketing, Central and state governments need to strike a balance between the economic compulsion of generating resources through the taxation route and the political exigency of providing relief to the suffering populace. It’s a tough call, and the pressure to bite the bullet will only increase in the coming days and weeks.