Latest petrol price hike is the fifth price rise in past six months since government deregulated petrol price from its control. The total hike in past six months is around Rs 8.50/- and the petroleum ministry predicts further rise in future as the crude price in global market is on the rise. Since long the oil refineries were claiming deregulation of fuel price to cut down their losses. At last government gave in for petrol but diesel price is still under government control. So are kerosene and LPG as they directly impact the vote bank. But is it really so? Though the majority is not touched by the rise of petrol price directly but there are always indirect effects. So, any rise in fuel price fuels inflation. Hiking petrol price affects only middle class budget keep everyone else happy. Because government, in central or states garner more in terms of taxes. Let us see the approximate break ups of petrol price when it is Rs58.90 per liter. It is assumed that ex-refinery petrol price is around Rs 28.93 (the current crude price in the international market around $90 per barrel) per liter. It is added up with excise duty Rs14.35 plus education cess Rs0.43 plus Vat Rs5.50 plus crude oil custom duty Rs1.10 and petrol custom duty Rs1.54 with dealer’s commission Rs01.05 plus average transportation cost Rs 6.00 ; makes the total Rs58.90. However, it is very difficult to determine petrol’s ex-refinery price as it is produced along with all other petroleum products. The huge profits made by oil refineries arouse doubts about the figure they offer.
Cutting down the taxes may cut down the petrol price by at least 40-50% from its present level. Our government’s failure to collect direct taxes forces them to look for such alternative indirect taxes, axing the middle-class. It is tragic the most affected middle class salary earners are not the tax evaders. Their only weakness is they don’t have much say through ballot boxes.
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