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Petrol and diesel prices rise may fuel Modi government's biggest heartburn yet

Petrol and diesel prices rise may fuel Modi government's biggest heartburn yet

Prices in Delhi have increased by Rs 2.54 since May 14 after a 20-day freeze on petrol prices ahead of Karnataka election results.

Opposition leader in Delhi assembly Vijender Gupta on Thursday asked the Delhi government to roll back Value-Added Tax by 12 per cent on petrol and 10.5 percent on diesel increased during the Aam Aadmi Party's (AAP) regime.

Revised petrol prices in Nagpur today on May 25 is 85.57 and 72.04 for diesel.

Noting that petrol and diesel prices are defined by worldwide crude oil rates, the chief minister said the GST Council will also have to look into aspects like revenue losses before taking a decision.

Vijender Gupta said that the Delhi government had earlier raised Value-Added Tax on two occasions to the extent of 7% on petrol and 5.5% on diesel.

Diesel prices across metros on May 23
Diesel prices across metros on May 23

"It is also likely to have a negative effect on consumer spending as putting fuel in the auto to get to work takes priority over shopping and eating out". In past 10 days there is consecutive rise in prices of petrol and diesel for which the Narendra Modi government has to face the public and opposition parties who all are demanding corrective measures.

The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October previous year by Rs2 a litre.

"If the price of oil goes up towards $100 a barrel we will very likely see a return to the dark days of April 2012 when petrol and diesel hit record highs". Until June 2015, the government subsidised India's oil refiners and marketers such as Indian Oil, HPCL and BPCL. "It is possible to cut upto Rs 25 per litre, but the government will not". Rates vary from state to state depending on the incidence of local sales tax or VAT. We are trying to build a consensus in GST Council on bringing petroleum under GST.

According to Moody's Investors Service, ONGC and OIL could be asked to bear a part of government's fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019.

It was recently revealed by the RAC that, prices at the pumps are at a three and a half year high - but they are expected to rise again. Under GST, the maximum tax slab is that of 28 per cent whereas the government is collecting much higher taxes by keeping petrol and diesel out of GST.

Foreign media head to N. Korea to witness nuclear site destruction
North Korea has threatened to pull out of the meeting after comments by US National Security Adviser John Bolton. But in a statement last week, North Korea warned it could walk away from the table, objecting to joint U.S.


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