The Petrol prices that keeps climbing and refuses to come down

Indians have been in a lockdown since the 3^rd week of March in 2020. Lockdown forced people to stay at home and as a result, traveling came to a virtual halt. People stopped using personal two and four-wheelers. This trend was witnessed all over the world and as a result, petrol consumption went down globally. The Oil producing countries like Saudi Arabia, Russia, and other Gulf countries were left with huge oil inventory resulting in a price crash.

The Government of India used this opportunity to buy oil at nearly 1/3^rd the price and stocked up its storage. India filled up its reserves with 16.71 million barrels in April-June 2020 at US$ 19 per barrel. However, with things returning to normal the oil prices have started moving up. It is currently selling at US$ 70 a barrel  though is still below the US$ 100 a barrel during Manmohan Singh’s regime.

Petrol is taxed both by the Centre and State government and accounts for 60% of the retail selling price. If the price of 1 litre of Petrol in Delhi is Rs 90, the govt takes away Rs 55 as taxes. Therefore, a litre of petrol that should  cost Rs 35 a litre costs more than Rs 90 a litre.

Petrol prices have become a sensitive subject

There is a huge demand to roll down the taxes and pass on the benefits of low oil prices to common people. From the trucker’s union to RBI governor, from opposition leaders to Sonia Gandhi, everybody has requested the government to reconsider the prices. But neither Dharmendra Pradhan, our petroleum minister nor the finance minister is interested in a common man’s problem. It seems that the Modi government has got so much used to this extra source of revenue that they just don’t want to loosen the grip.

The government’s point of view is that it has to support the poor through direct cash transfers. Also, Covid-19 has increased the spending on healthcare. On the other hand, few parameters indicate that the economy is limping back to normalcy. The Oct-Dec quarter GDP has increased by a marginal 0.4% over the same period last year. The GST returns for January are Rs 1.20 lakh crore, a record high to date.

It’s time for the Government to reduce central taxes on petrol and diesel or bring it under the GST regime. But currently there is a status quo as far as petrol prices are concerned.

Why is the government not interested in bringing down the petrol prices?

Reasons why the price is high

1.The lockdown forced people to stop socialising and also to work from home. As a result, people have put on a lot of weight. Some of the renowned economists worldwide suggested the Modi government to put the economy back in shape which the government took seriously. By keeping petrol prices high it’s forcing people to either walk or use a bicycle. It expects that this will help them in losing weight and bring them back in shape.

Helping people save their jobs

2.The government was trying to help thousands of drivers employed with Uber and Ola. It not only wanted to save their jobs but also wanted them to earn handsomely by incentives. By keeping petrol and diesel prices high it wanted people to travel by app-based cabs thereby helping the community.

3.The food delivery apps were laying off the delivery guys. To save their jobs the govt. hiked up the prices of LPG cylinders. It wanted people to order from outside using the food delivery apps instead of cooking at home. Also, a lot of families especially husbands and kids got tired of having the same menu at home every day during the lockdown and requested the government to give them a break.

Giving back to the society

4.To reduce carbon emissions and pollution, the ministry of environment wanted people to travel less. And what better way than to increase the petrol prices making it unaffordable for people to travel.

5.The government wanted to revive the concept of neighbourhood.  In the 80’s and 90’s people used to socialise a lot with their neighbors, a concept that has disappeared in current times. By raising petrol prices the govt discouraged people from driving 30-40 km to meet old friends. Instead, it wanted people to make new friends in their neighbourhood.

6.With the world economy getting back on its feet, the oil prices have started moving upwards. Our government had anticipated this much in advance and to save the people from the shock of ups and downs of the oil market it has kept the prices on the higher side.

7.The government wanted the corporate world to practice work-life balance by allowing more and more employees to work from home. It has therefore kept the petrol prices on the higher side to discourage them from commuting to the office daily.

8.More and more people should shop online and help promote e-commerce companies like Amazon, Flipkart, Nykaa, Myntra. This was only possible if people stopped visiting the shopping malls and shopped online with a convenience of a click. A high petrol price dissuades them to take out their car and visit a mall.

These are a few of the reasons that came to my mind on why the government is not willing to bring down the petrol price. You may have a few more. Please feel free to share.

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