Centre working on long-term solution on fuel price hike: Pradhan

Randal Sanchez
May 28, 2018

It is mostly agreed that bringing fuel prices under GST would help significantly reduce taxes imposed on petrol and diesel - a key component behind the now record-high prices. The fuel was the most expensive in Mumbai at Rs 73.53 and Rs 72.91 in Chennai.

On Sunday, petrol prices in Mumbai, Kolkata and Chennai were Rs 85.93, Rs 80.76 and Rs 81.11 per litre respectively. With this news coming in, the crude oil prices have dropped by just over $1 per barrel already but it will take at least a fortnight more before the drop in prices is substantial enough to affect the retail prices in India.

Under the scheme, oil producers, who get paid global rates for the oil they produce from domestic fields, would have to part with any revenue they earn from prices crossing United States dollars 70 per barrel mark.

With consumers feeling the heat of surging fuel prices, there have been demands and suggestions from various quarters, including from within the government, for immediate action to curb the prices.

Soaring petrol and diesel prices may be causing a massive financial burden on people at large but there appears no respite in sight.

During the UPA government, with a little rise in petroleum prices the opposition parties raised a hue and cry.

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Prices of petroleum products have hit an all time high in Indian history. We have advocated for bringing petroleum products under Goods and Services Tax (GST).

Since 14 May, rates have gone up by Rs2.84 a litre in case of petrol and Rs2.60 in diesel.

When the Modi Government came to power in April 2016, the crude oil was trading at $107. In October previous year, the Centre cut excise duty by Rs 2.

The government is considering a windfall tax on oil exploration and drilling companies such as ONGC, Oil India and Vedanta-run Cairn India as part of a plan to cushion consumers from rising crude prices.

OMCs take into consideration the daily performance of worldwide crude oil, government's excise duty and state's Value-Added Tax for deriving final retail prices in India.

"The supermarkets are being very quick to pass on increases in the wholesale price of fuel brought about by a 17% rise in the price of oil to above $80".

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