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Is the Petroleum Minister Genuine in Citing Reasons for Fuel Price Hike?

There is no denying the fact that hikes in petrol and diesel prices have a painful impact on the lives of common people, and have a ripple effect across all economic sectors, given how rise in fuel price cascades. Naturally, people are expressing their discomfort and the opposition has found an issue to corner the government on.

Perhaps, the relevant question that arises at this stage is: is the government inactive in addressing this issue? Is the government wilfully “exploiting” people as the political opposition alleges? Or is it just a case of having no other option at this point in time?

If the reason is the third one, then, as a citizen one can express the pain but the outrage becomes meaningless.

Fuel Price Hike – Dharmendra Pradhan’s Explanation

Speaking to ANI news agency, Union Petroleum Minister Dharmendra Pradhan explained the two major reasons compelling the country to bear the brunt of fuel price hike.

First, the external reason that the oil producing countries have reduce the production volume.

Second, the administration is also not in a position to cut taxes because both the Central and state governments are running welfare measures that are helping the poor (Ujjwala for example), and at a time when COVID-19 has dented the economy, there is no other way to collect the taxes.

Reduction in Oil Production

“The international market has reduced fuel production, and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer,” Union Minister for Petroleum and Natural Gas cited the first reason for hike in fuel prices.

Is he right in claiming so?

Of course, it is widely reported that the decision of Saudi Arabia to cut down crude oil production has sent the Brent crude prices shooting.

Back in January, The New York Time reported,

“OPEC, Russia and other oil major producers reached an unusual agreement on production quotas on Tuesday, with Saudi Arabia committing to reducing its oil production by one million barrels a day and Russia and Kazakhstan winning relatively modest production increases. The effect will be an overall reduction in oil production. The news pushed prices up more than 4 percent, reaching levels not seen since February.”

Here is another headline that cites the same reason and explains how it brought trouble for Asian countries.

Covid-19 Situation

One may ask, even if international crude prices are up, why can’t the government reduce taxes on petrol and diesel which could provide some respite?

Here comes the second reason. “Another reason is COVID. We have to do various development work. For this, Centre and state governments collect the tax. Spending on development work will generate more jobs. Govt has increased its investment and 34 per cent more capital spending will be done in this budget. State governments will also increase spending,” the Union Minister told ANI.

There is always scope for shifting the blame among Centre and States when it comes to fuel price hike. Nevertheless, the claim of the Minister that both the state and union government need money to spend, and the states too depend on tax from the fuel are fact that nobody can deny.

Robert Vadra may try conveying a point against the Union government by cycling on the roads of Delhi, but it is also a fact that Congress-led Rajasthan government has the highest VAT on fuel.

As a media report notes, “Rajasthan, which levies the highest VAT on fuel in the country, had the highest petrol and diesel prices. In Sriganganagar town of the state, petrol soared to ₹99.29 and diesel jumped to ₹91.17 per litre. The Rajasthan government had late last month cut VAT on petrol and diesel by ₹2 per cent. Despite this, the state has the highest VAT at 36 per cent plus ₹1,500 per kilolitre road cess on petrol. On diesel, the state levies 26 per cent and ₹1,750 per kl road cess.”

Relevant Query Amidst Fuel Price Hike

In conclusion, we again present the questions that we posed at the beginning of this article.

Perhaps, the relevant question at this stage is: Whether the government is inactive in addressing this issue? Is the government wilfully “exploiting” people as the political opposition alleges? Is there a situation like during the UPA era, when fuel prices were hurting the citizen in the face of the frustrating realization that people in the government were allegedly involved in multi billion scams amidst the suffering of common people?

Or it is just the case of having no other option at this point in time?

If the reason is the third one, then, as a citizen one can express the pain but the outrage becomes meaningless.

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