Oil turmoil

The Union government’s excise collections from petrol and diesel are soaring – and so are the prices of these two petroleum products, prolonging the ordeal of the hapless consumer. The Centre collected Rs 94,181 crore through the levy of excise duty in just three months (April-June), even as the prices of petrol and diesel have been raised on 39 and 36 occasions, respectively, during the current fiscal. In the 2020-21 financial year, the government had hiked excise duty to record levels with the aim of generating revenue amid the onset of the pandemic. The move paid off as the tax collections rose by 88 per cent to reach Rs 3.35 lakh crore by March 31 this year, and that too despite the dip in fuel sales during the lockdown months of 2020.

The government keeps insisting that the prices of petrol and diesel are market-determined, but the fact remains that Central and state taxes account for about 60 per cent of the retail prices. Both the Centre and the states are reluctant to part with even a fraction of their excise gains. Price fluctuations in the global oil markets are inevitable, but political will has a key role to play in bringing respite to the people. It was no coincidence that the rates of petrol and diesel remained largely unchanged in March and April this year, when four states and a UT went to the polls. The price freeze, effected soon after the election schedule was announced in February-end, lasted till the declaration of the results on May 2. Subsequently, the situation was quickly and predictably back to square one.

Caught on a sticky wicket, the Centre has approached crude oil-producing countries as well as the Organisation of Petroleum Exporting Countries (OPEC), seeking affordable crude prices for consuming nations like India, which imports 85 per cent of its oil needs. Even as New Delhi’s Gulf diplomacy faces a litmus test, the government needs to shed its aversion to reducing excise duty. After all, economic recovery is inseparable from people’s welfare.