RBI Pushes Centre To Slash Taxes On Petrol, Diesel

Fuel prices have been hitting new highs in major cities across India and even today after a 30 paise hike price of petro per litre surged to Rs. 86.95 in New Delhi and diesel is retailing for Rs. 77.13. In its bi-monthly monetary policy statement, the RBI noted that the sharp correction in food prices has improved the food price outlook, but pointed that pressure still remained and that core inflation was on the higher side.

"Pump prices of petrol and diesel have reached historical highs. An unwinding of taxes on petroleum products by both the Centre and the states could ease the cost-push pressures," said the MPC in its statement.

Petrol and diesel prices have surged to new all-time highs in the country despite international crude prices not surging as sharply. And what is triggering the rise in fuel prices is the excise duty levied on petrol and diesel. "What is needed at this point is to create conditions that result in a durable disinflation. This is contingent also on proactive supply-side measures," the MPC noted. The MPC further stressed that with the commencement of the nationwide Covid 19 vaccination drive, the growth is coming back on track and the outlook has improved substantially.

The MPC holds a positive view on the announcements made in the Union Budget. "The projected increase in capital expenditure augurs well for capacity creation thereby improving the prospects for growth and building credibility around the quality of expenditure. The recovery, however, is still to gather firm traction and hence continued policy support is crucial," the MPC noted.

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