Fuel Prices Shoot Through the Roof Despite Finance Minister’s Assurance During Budget 2021

It is noteworthy that while the global crude oil prices are not at an all-time high, the taxes imposed on fuels in India are.

In many ways, the budget of 2021 presented by Finance Minister Nirmala Sitharaman on the 1st of February, 2021, has been a “mixed bag”, as termed by many analysts. One of the most notable features of this year’s budget was the ₹2.5/litre and ₹4/litre Agricultural Infrastructure Development Cess (AIDC) that was imposed on petrol and diesel, respectively.

While the rise in fuel and gas prices has been constant for the past couple of years, the Finance Minister announced with the budget 2021 that the Cess imposed on petrol and diesel will be offset by a cut in excise duties, thus not impacting the prices. This however turned out to be all pomp and no show as the prices of both the petroleum fuels saw an upward growth the very next day.

It is noteworthy that while the global crude oil prices are not at an all-time high, the taxes imposed on fuels in India are. During the Congress-led UPA government, international prices of crude oil had gone up to $142 per barrel — today, it stands at just $52 per barrel, yet prices have breached the all-time high mark by a fair margin. Currently taxes amount to 57 – 62% of the fuel prices in the country. Since the last budget itself, the excise duty on petrol and diesel has been hiked by 13 – 16%. Interestingly, excise duty is the only revenue that has seen a growth for the government in 2020-21 with an income of ₹3.61 Lakh Crore rupees generated from it in this period.

Before budget 2021, a Basic Excise Duty (BED) of ₹2.98 per litre was levied on petrol, and another ₹12 a litre was charged as Special Additional Excise Duty (SAED) and Rs 18 as road and infrastructure cess. To accommodate AIDC, the BED was cut to ₹1.4 and SAED to ₹11. Similarly, on diesel, BED was cut from ₹4.83 to ₹1.8 a litre and SAED to ₹8 from ₹9 per litre.

Fuel Prices in Other Countries

Union Oil Minister and Finance Minister Under Fire for Rising Fuel Prices

While the prices of petroleum prices are skyrocketing in the country, the Union Oil Minister Dharmendra Pradhan as well as the Finance Minister of the country have been under fire. The Union Oil Minister tried to justify this rise by saying, “The international market has reduced fuel production and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer. We have continuously been urging the Organization of the Petroleum Exporting Countries (OPEC) and OPEC plus countries that it should not happen. We hope there will be a change.”

On the other hand, the Finance Minister while ignoring calls for reduction in excise duty rates on these fuels said that the centre and state governments will have to together work out a mechanism to bring retail rates to reasonable levels, and that the issue posed a “dharm sankat (divine predicament)”.

Political Leaders Aghast Over Rising Petrol and Diesel Prices

With fuel prices breaching the ₹100/litre mark in many states of India, notable political leaders of the country criticized the ruling BJP with the Congress Chief, Sonia Gandhi, penning down a letter to Prime Minister Narendra Modi. Gandhi accused the Modi Government of “profiteering” off “people’s misery”. The veteran leader also urged the Prime Minister to follow his ‘Raj Dharma’ and provide people with some respite from rising fuel prices that are crushing the economy.

“I write to you to convey every citizen’s anguish and deep distress regarding the spiraling fuel and gas prices. On one hand, India is witnessing systematic erosion of jobs, wages and household income. The middle class and those at the margins of our society are struggling. These challenges have been compounded by runaway inflation and an unprecedented rise in price of almost all household items and essential commodities,” the Congress chief said.

Gandhi also said in her letter that even though the current government has been in power for 7 years now, it is stupendous how it has constantly been pinning its failures on the previous government.

“I fail to understand how any government can justify such thoughtless and insensitive measures directly at the cost of our people. Your government has increased excise duty on diesel by 820% and on Petrol by 258% over and collected upwards of Rs. 21 lakh crores in the last six and a half years,” Gandhi said.

The Samajwadi Party chief Akhilesh Yadav was also critical of the Modi Government for the back-breaking rise in Diesel and Petrol prices. Akhilesh said that;

“In the tenure of the BJP government, prices of petrol and diesel have soared so much that people living in the border areas of Gorakhpur – the home district of Chief Minister Yogi Adityanath – are forced to go to Nepal to get fuel. Why is the BJP igniting the fire of inflation, after taking votes from the people in the name of reducing it? Those who are doing a ‘taandav’ of destruction in the name of development have thrown the public into the fire of inflation, unemployment and corruption, he said, adding that the public has made up its mind to give a “permanent holiday” to the BJP.”

Twitter was also abuzz with political leaders actively targeting the BJP over rising Diesel and Petrol prices. Here are a few of them:

Mayawati

The BSP supremo tweeted in Hindi saying, “The prices of essential items like petrol, diesel and cooking gas (LPG) are increasing in an uncontrolled manner after government control over the prices were removed. It has created problems everywhere, and the lives of the people are affected. The government should take cognizance of the seriousness of the situation and find a solution. The increase in additional taxes, especially on petrol and diesel, by the Centre and states is resulting in sky-rocketing prices, and the burden is increasing almost every day on crores of poor and unemployed people. Has the Constitution ensured such a welfare state principle?”

2. साथ ही केन्द्र व राज्य सरकारें खासकर पेट्रोल व डीजल पर अतिरिक्त करों की जो मनमानी वृद्धि कर रही हैं उससे ही इनकी कीमतें आसमान छू रही हैं व करोड़ों गरीब व बेरोजगार जनता पर इसका सीधा बोझ आएदिन बढ़ रहा है। क्या संविधान ने ऐसी ही ’कल्याणकारी सरकार’ का सिद्धान्त सुनिश्चित किया है?

— Mayawati (@Mayawati) February 21, 2021

Rahul Gandhi

Tweeting a picture of the problems that a common man suffers due to rise in the prices of diesel and petrol, Rahul Gandhi called it “Development of inflation,”

पेट्रोल पम्प पर गाड़ी में तेल डालते समय जब आपकी नज़र तेज़ी से बढ़ते मीटर पर पड़े, तब ये ज़रूर याद रखिएगा कि कच्चे तेल का दाम बढ़ा नहीं, बल्कि कम हुआ है।

पेट्रोल 100 रुपय/लीटर है।

आपकी जेब ख़ाली करके ‘मित्रों’ को देने का महान काम मोदी सरकार मुफ़्त में कर रही है!#FuelLootByBJP

— Rahul Gandhi (@RahulGandhi) February 22, 2021

Priyanka Gandhi

In a Hindi tweet, Priyanka Gandhi Vadra said that, “The BJP government should rename that day of the week as ‘Good Day’ when diesel and petrol do not increase. Because, due to rising inflation, the rest of the days are ‘expensive days’ for common people”.

पिछले तीन महीने में घरेलू गैस सिलेंडर पर 200 रुपए बढ़े।

पेट्रोल डीजल शतक मारने की तरफ बढ़ ही चुके हैं।

अर्थव्यवस्था के दोनों छोरों पर खरबपति मित्रों के लिए बैटिंग करने वाली मोदी सरकार की पिच आमजनों के लिए कमरतोड़ महंगाई से भरी हुई है। pic.twitter.com/SsLb3C7Nnl

— Priyanka Gandhi Vadra (@priyankagandhi) February 25, 2021

In a symbolic protest against rising petrol and diesel prices, Robert Vadra, the businessman husband of Priyanka Gandhi, rode a bicycle from the Khan Market area of Delhi up to his office.

A Ray of Hope or Another Pomp and No Show?

A striking point that came from the Finance Minister amidst this discussion was when she said that the answer to controlling the rise in fuel price might be in bringing Petrol and Diesel under the purview of the Goods and Services Tax (GST). This remark was particularly a standout because, since the introduction of the GST in 2017, the Modi government has made it a point to keep petroleum fuels and alcohol out of its ambit.

The FM found support from the Reserve Bank of India’s governor, Shaktikanta Das, who urged the Centre and states to reduce taxes on petrol and diesel. This could also be seen as a nudge towards pushing both sides to bring petrol and diesel under the ambit of GST.

Though this hint by Sitharaman and the RBI Governor brings hope, but it remains to be seen whether this will actually go on to provide respite to the common man of the country, from the scorching heat of fuel prices or once again be an All Pomp but No Show.

Here are the Petrol and Diesel prices across States and UTs, according to latest reports: