Can petrol sell at Rs 40 a litre? Petroleum minister blamed high price on the US election
Petrol should not be selling at more than Rs 40 a litre, says BJP MP Subramanian Swamy. The Petroleum Minister however put the blame on the US election and Oil producing countries
If he was amused or irritated by the question, the mask on his face hid it well.
But the Union minister for Petroleum & Natural Gas Dharmendra Pradhan appeared unfazed when asked about the daily increase in fuel prices. It had to do with the recent US Presidential election, he replied enigmatically and added that OPEC countries had decided to increase oil production and hence ‘benefit milega’. He did not explain who would benefit though.
The day after he made that statement on December 6, petrol in Mumbai was selling at Rs 90.25 per litre. The fuel was costliest in the country that day in Prabhani district of Maharashtra, where it sold at Rs 92.47 per litre. A day earlier on December 5, petrol in Delhi was at a two-year high and was selling at Rs 83 plus a litre.
Worse, in the first fortnight of December, the Government twice increased the price of a 14.2 Kg LPG cylinder by Rs 50 each. On December 15 an unsubsidised cylinder cost Rs 694 in Delhi, up from Rs 497 in June, 2019. On November 15, 2020 it cost Rs 594.
The new price of the cylinder is Rs 720.50 in Kolkata, Rs 694 in Mumbai and Rs 710 in Chennai. The price of 19 kg commercial gas cylinder has also increased. The rate of this cylinder in the national capital Delhi is Rs 1332. It has increased to Rs 1,387.5 in Kolkata, Rs 1280 in Mumbai and Rs 1446.5 in Chennai. The government also stopped providing subsidy on domestic cooking gas since September 2020.
Subsidies on LPG have declined from Rs 31,447 Crore in 2018-19 to Rs 22,636 Crore in 2019-20 and to just Rs 1,126 Crore. Kerosene subsidy meanwhile has declined to virtually zero.
Since 2014, petrol prices are estimated to have increased by 142% and diesel by a whopping 429%. So much so that BJP’s self-righteous Rajya Sabha MP and poster boy Subramanian Swamy tweeted on December 7 that the price of petrol charged by oil companies in India was only Rs 30 a litre while Rs 60 per litre were being collected by way of different taxes and commission. The BJP MP, who had fancied his chances to be the finance minister, declaredthat in his considered opinion, petrol should not be selling at more than Rs 40 a litre. The Union Petroleum Minister was upset in June this year when the Congress organized nation-wide protests against fuel-price hikes and demanded a roll back. Pradhan accused the Congress of politicizing the issue and claimed that the common man had not been affected by the price hikes. In any case, he went on to claim, the taxes collected from the sale of petroleum products were being spent on the health and welfare of the common man. The Congress did not want the welfare of the common man, he declared.
In any case, the public sector oil companies, which sell petroleum products at one-third the retail price, have still seen their net profits grow. The two major oil companies, Indian Oil Corporation and Bharat Petroleum Corporation Ltd., have seen their net profits grow steadily since 2013-14(see table). This after the companies have paid their taxes and dividend to the government, which owns them.
Raising revenue by taxing fuel, consumption of which does not rise or fall in proportion to price, is attractive for the government. But at what cost? Besides putting the common man to great hardship, high fuel cost has increased inflation, eroded savings and raised cost of transportation. Not enough has been done on the other hand to promote public transport, electric vehicles and to reduce oil imports.
Prices in India’s neighbourhood are also high. Petrol prices in Pakistan have breached the 100 Pakistani Rupee mark. But then every Indian Rupee is worth more than two Pakistani Rupees. Such comparisons are, however, odious and poor consolation to Indians as they wait in vain for the benefit of low international prices to be passed to them.