Dominant narratives are often presented as an objective truth, It is important to remember that such narratives are often set by those with an agenda and hence the need for perspective. As EH Carr famously said, “The historian without his facts is rootless and futile; the facts without their historian are dead and meaningless”.
The context and understanding of fuel prices provide a case in point. Unsustainably low petrol and diesel prices belong at best to a world of fantasy.
That fuel prices in India are high is based on a narrative that is deeply flawed. They are infact, amongst the lowest in the world largely due to Prime Minister Narendra Modi’s efforts at ensuring energy availability and affordability.
It was PM Modi who cut central excise duty twice – in May 2022 and November 2021 –amounting cumulatively to Rs. 13 per litre of petrol and Rs.15 per litre on diesel. This cameat a cost Rs. 2.2 lakh crores a year to the Central exchequer.Furthermore, Govt. of India even imposed an export cess and windfall tax on domestically produced petroleum products year to prevent exporters from profiteering at the cost of domestic consumers. Oil Marketing Companies (OMCs) being “good corporate citizens” incurred huge losses during price peaks for ensuring the supply of petrol and diesel at controlled rates to Indian citizens, which have been kept unchanged by public sector OMCs since 6th April 2022.
Many State Governments also came forward with VAT cuts to bring down the price of petrol and diesel. The keyword here is many, not all, few states are conspicuous by their determination to not cut VAT rates and lower prices in the state.
It is worth highlighting that in BJP ruled states and the states which have cut their VAT rates, the rates of VAT on Petrol & Diesel are generally in the range of Rs.14.50 to Rs.17.50 /litre, while VAT in states isthe range of Rs.26 to Rs.32 /litre. This translates into a huge difference in the common man’s pocket and expenses.
In Congress-ruled Rajasthan, consumers are paying Rs. 108.48/litre for petrol and Rs. 93.80/litre for diesel which is approx. Rs. 12/litre more on petrol and Rs. 4/litre more on diesel than what consumers pay in the neighbouring BJP-ruled Uttar Pradesh who pay Rs. 96.57/litre and 89.76/litre.
Due to the lasting damage done by the UPA Govt. between 2005-12, under which Long-term oil bonds worth Rs. 1.44 lakh crores were issued instead of under-recoveries to OMCs, and for which the Indian taxpayer is still paying back Rs. 3.2 lakh crores as interest + principal.
In YSR-Congress ruled Andhra Pradesh, the price of petrol and diesel at Rs. 110.48/litre and Rs. 98.27/litrerespectively, is almost Rs. 10 higher than in Karnataka where it is Rs. 101.94/litre and Rs. 87.89/litreAndhra Pradesh gets the record for the State with the Highest Petrol Price in India, for 2nd year running.
In TRS-ruled Telengana, consumers pay the 2ndhighest rate of petrol in India @ Rs. 109.66/litre. This is a whopping Rs. 13/litre higher than in UP (Rs. 96.57/litre). In percentage terms, the VAT rate in Telangana on petrol is 35.2%, compared to 26.8% in UP! The VAT rate in Telangana on diesel is 27%, compared to 17.48% in UP!
In West Bengal, consumers pay Rs. 106.03/litre for petrol and Rs. 92.76/litre for diesel when consumers in Assam only pay Rs. 97.02/litre and 88.30/litre respectively. If Didi cares for her people, then why doesn’t she bring the petrol price below Rs. 100/litre?
The hypocrisy is bare and blatant andunhinged for all to see. Even when it comes to aviation fuel prices, which are crucial for the hospitality and travel sector, the blatant greed of certain states is clear and visible. In the recent Maharashtra Budget 2023: State Government Slashes VAT On Jet Fuel To 18%, while India’s biggest hub — Delhi — remains among the few states that still levy a very high tax at 25% on jet fuel.
While natural gas prices at the international gas indices (Japan Korea Marker) have increased by up to 228% between January 2021 and February 2023, in India the CNG price rise (Delhi representative market) was restricted to about 83% thanks to steps such as increasing domestic gas allocation to about 250% of the allocation since 2013-14, and diverting domestic gas from other non-priority sectors to meet the requirement for CNG(Transport) and PNG(Domestic) segments.
Recently the PM Modi led cabinet took a major decision to revise pricing methodology of domestically produced natural gas continues to give a fillip to India’s goal of gas-based economy. This balanced decision, whichdetermines than Indian Natural Gas prices shall be 10% of the monthly average of Indian Crude Basketis being hailed as a balanced reform by the industry as well as consumers. While the industry benefits from more dynamic and robust pricing mechanism, consumers are already reaping the benefits which have been passed on in the form of Rs. 7-8 price cuts in domestic PNG and CNG.
Even as the world acknowledges India’s phenomenal success in providing accessible and affordable energy to its 1.4 billion citizens in these tumultuous times, a few hypocritical state Governments and political leaders continue to blare nonsense while hiding their anti-citizen tactics. It is time for them to cut states tax on fuel.
(The author is Union Minister for Petroleum & Natural Gas and Housing & Urban Affairs)
