As petrol prices hit record high, govt left with no choice but to cut taxes

Petroleum ministry statistics show that it is the central government which has made the biggest gain in terms of revenues from petroleum since 2104-15.

india Updated: May 22, 2018 09:56 IST

A fuel station displaying the current fuel prices in Guwahati on Monday. Petrol and diesel prices were increased in the range of 33-34 paise per litre and 25-27 paise per litre across Delhi, Kolkata, Mumbai and Chennai. (PTI Photo)

Fuel prices broke yet another record on Monday. The government is left with little option but to pare back taxes, especially with projections showing no let-up in global crude oil prices soon.

International affair

The upswing in fuel prices is in keeping with the rising trend in international crude prices since last year. Brent crude forecasts by the US Energy Information Administration suggest that while oil prices might come down a bit in the next year, they would still be higher than 2017 levels.

To be sure, there is a huge mark-up in what Indian consumers pay for petrol-diesel and what it costs in the international market.

If fuel is to remain a deregulated commodity, the only way retail prices will come down is if the governments — state or central — take a haircut in tax earnings. Petroleum ministry statistics show that it is the central government which has made the biggest gain in terms of revenues from petroleum since 2104-15.