Published: Sun, October 07, 2018
Money | By Ethel Goodwin

Understanding the politics of fuel price

Understanding the politics of fuel price

In Kolkata, the petrol price was Rs 83.35 per litre while that of diesel was Rs 74.80 this morning. On Thursday, October 4, the price of petrol hit the Rs 84 per litre mark in Delhi while diesel cost went Rs 80 per litre in Mumbai.

Since April this year, prices of petrol and diesel has witnessed a steep upswing, baffling consumers all over the country. Whereas Maharashtra government has not done any additional reduction on petrol price and Jharkhand also not slashed down the price.

In Chennai, petrol and diesel retailed at Rs 85.04 per litre and Rs 77.73 per litre respectively.

India's decision this week to cut petrol and diesel pump prices that had reached record highs sent oil company shares tumbling on Friday on concerns about a return to the kind of regulated regime that had hammered their profits in the past. He added that the last time that the Centre asked states to provide relief to the common man "only BJP or NDA allies-led states" did that.

The move reversed a 2014 decision to scrap regulated fuel prices, a regime that was blamed for deterring state oil marketing firms from expanding and for choking off investment in domestic oil fields by India's biggest oil producer.

The consumers will get a benefit of Rs. 2.50, said finance minister Arun Jaitley while announcing the decision.

The new prices became applicable from Thursday midnight. Earlier, while briefing media, Union Finance Minister Arun Jaitley said that they have reduced Rs 2.50 on petrol and diesel prices.

In a boost to oil companies, the Reserve Bank of India (RBI) on Wednesday eased the overseas borrowing norms by up to $10 billion. BJP-ruled Gujarat, Tripura and Chhattisgarh governments have also announced a similar reduction in oil prices. However, the diesel rate in Mumbai was increased by only 7 paise on Saturday.

Opposition-ruled States like Karnataka, Andhra Pradesh, West Bengal and Kerala had already reduced Value-Added Tax but Congress-ruled Punjab is yet to take a call.

By lowering duties, the Narendra Modi government is borrowing a page from the rulebook of past governments that have lowered levies whenever worldwide oil prices shot up.

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