ABKI BAAR 100 KI SARKAR

From something which was completely indispensable to now being priced extremely out of odds, costing us an arm and leg, squeezing out middle class budgets, petrol prices have been skyrocketing and have learnt no limits. Crossing Rs.100/L in more than 10 states including Delhi, Rajasthan, MP, Maharashtra, J&K etc.

Why exactly are petroleum prices escalating apace? Erstwhile, the government solely regulated petroleum prices in India but because of constant public pressure, congress government under Dr. Manmohan Singh decided to break this array by deregulating prices of petrol in 2010 and further in 2014, later BJP came in power and deregulated the prices for diesel. This system is called the “no dynamic price system”, under this method prices for petroleum products are determined on the basis of price regulation of crude oil in the global market, as and when prices fluctuate in the global market, their reflection is seen on the prices within the country. And in the Indian scenario, it meets almost 84% of its petroleum demand through imports which leads to a very high dependency on other countries and global oil prices.

Previously, prices used to change on the 1st and 16th of every month based on the fluctuation of prices in the global market. But 15 days was a long time and people started speculating prices in accordance with the prices in the global market which used to create a panic among the masses and on the 15th day, long lines were seen outside petrol pumps if a rise was expected and this sudden increase in demand led to problems like shortage. So on 16th June 2017, the government revised their policy and decided to change prices on a daily basis i.e. at 6 o'clock every morning which is followed till date and because of this exact reason the price fluctuates every day in the country. The major reason behind revising the policy was so that every small change happening in the global market can be directly observed by the dealers and customers.

After deliberation and fracturing the prices, it was also observed that the government too plays a major role in the prices through the taxes imposed by them. On 16th February 2021 Delhi recorded a price of Rs 89.29/L in which Rs 31.82 was the base price, central government tax was Rs 32.90, Rs 20.61 was the state tax and after including freight and dealer commission it shot to a total of Rs 89.29/L. So approximately 60% of the price that the customers pay is constituent of nothing but taxes.

To quantify, the government recently raised the central excise duty from 19.98 Rs/L to 32.98 Rs/L, a clear increase of Rs 13on petrol and 16/L increase on diesel, even the VAT i.e, the state tax charges has increased to a great number, within a year. On comparing prices from 2014 central excise duty was Rs.10-11/L, which has approximately risen 3 times compared to current time.

Prices have been diverse in different geographical regions of the world. Countries like Pakistan, Sri Lanka, Nepal has recorded prices ranging from Rs. 50-70/L, whereas in countries like Germany, France, South Korea, Hong Kong touched prices from Rs 94-178/L but comparison with these countries would be unfair as the annual income in these countries is around 2lakh whereas in india it is 20000 to 30000pa i.e. almost 10 times.

Rise and fall of prices in the Global market happens because of the push of demand and supply, according to which an increase in demand or a decrease in supply leads to rise in prices, but the other way round if demand falls or supply rises, prices fall.

Due to this reason, during the recent covid-19 lockdown the global demand for oil fell, however supply was the same due to which prices in the global market went negative . Now as the economies have revived to a certain extent, demand has also increased and so have the prices.

Summing it up, it has become a two-edged sword for the customers as when the prices in the global market rise, the prices for us rise in accordance to the global market condition but when they fall, taxes are hyped resulting in high petroleum prices which in turn create a heavy weight on consumer’s pockets.