Published: Tue, September 04, 2018
Money | By Ethel Goodwin

Bring petrol, diesel under GST immediately: Former FM Chidambaram

Bring petrol, diesel under GST immediately: Former FM Chidambaram

"If taxes are cut, prices will decline significantly", Chidambaram said on Twitter.

The recent slump in rupee also has lifted the import cost of crude oil, subsequently raising fuel prices.

On Monday, Andhra Pradesh Chief Minister N Chandrababu Naidu said price of petrol would soon touch Rs 100 a litre as also the rupee against United States dollar.

The prices of CNG and piped natural gas (PNG) were also hiked in metro cities since the price of gas procured by city distributors is mostly dollar-denominated.

Petrol price has risen by Rs 2.17 per litre since August 16 while diesel rates have climbed by Rs 2.62 - the biggest increase in rates witnessed in any fortnight since the launch of daily price revision in mid-June past year.

Diesel rates had hit Rs 69.31 a litre on May 28, but this record was breached on August 27 and on Monday they hit a fresh high.

In its statement the department of energy said it was aware that the sustained price increases of the past few months had put consumers under pressure, and had made a decision to intervene temporarily for this month - but that it was a "once off temporary intervention" to provide some relief against fuel price hikes.

"Relentless rise in prices of petrol and diesel is not inevitable". Officials said the spike in rates is on account of exchange rate falling to a record Rs 71 to a dollar, depreciating by Rs 2.5 in a month.

This takes the global price of crude oil and the value of the rand against the dollar into account.

"The prices of petrol and diesel are shooting up steeply and very soon, the price of petrol might touch Rs 100 per litre", said Andhra Pradesh chief minister N Chandrababu Naidu on Monday.

With expectations of further tightening in oil prices due to a mix of factors such as declining inventories in the United States, and Iran sanctions coming into place, the trend of rising petroleum prices is likely to continue. "Apart from that, crises in countries like Venezuela and Iran are increasing. Secondly, global currencies have weakened against the USA dollar", he said. On top of this, states levy Value Added Tax (VAT) - the lowest being in Andaman and Nicobar Islands where a 6 per cent sales tax is charged on both the fuel.

Pradhan said that the government was planning to put diplomatic pressure.

Since August 16, petrol prices have risen by over Rs 2 per litre.

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