Nagarabandh, a place which was never heard of until today, has gained prominence in the past few hours. Nagarabandh, in Madhya Pradesh, is now the first place in India where unleaded petrol retails at ₹100 per litre.
Domestic fuel prices have mirrored global oil prices and have risen. However, more than half the amount paid by the common man for petrol and diesel goes to the government coffers in the form of taxes.
What constitutes fuel price?
Brent crude oil prices have gained almost 24% this year, due to increased demand. Petrol costs have risen by ₹17.35 the past year, and diesel by ₹15 per litre. Diesel retails at ₹91.86 a liter in Ganganagar, a city in Rajasthan.
|Price charged to dealers ( excluding excise duty and VAT)||32.1||33.71|
|Dealer commission (average)||3.68||2.51|
|VAT (including VAT on dealer commission)||20.61||11.68|
Impact on public
With the uncontrolled and rapid increase of fuel prices, you can expect all your essential commodities to become more expensive due to increased cost of freight. This would lead to an inflation very soon. An unchecked increase in fuel prices does not spell good for the economy. The government has hiked the taxes on fuel to shore up the government coffers and make up the shortfall due to the pandemic and reduce the deficit.
Is this the right way to proceed? Probably not. But is there another commodity used by every single person in the country for which prices can be raised without earning their ire? Probably not.
It is interesting to note, that when BJP came to power in 2014 high fuel prices was one of the main issues raised by them against the Congress government. BJP had promised to bring down the price of fuel and help the common man. In 2014, crude was $109.1 a barrel, and now it is $63.5 a barrel. However, no such benefit has been passed on to the common man. The common man’s life has become even more cumbersome.