With a moderate slashing of fuel prices by the Union Government, though a sigh of relief is felt among the common people, the opposition especially the Congress and TMC still find fault behind this reduction of prices rather than have mocked the gesture. Instead of appreciating the moderate relief, their leaders indulged in street politics.
The belated step, in a bid to tame inflation, the Union Government has slashed excise duty on petrol and diesel by Rs 8 and Rs 6 per litre, respectively. The Centre claims to have done its job and has put the onus on the states to reduce VAT on fuel to provide respite to consumers. Among the non-BJP-ruled states, Maharashtra, Rajasthan and Kerala have promptly lowered VAT, but others such as Tamil Nadu and West Bengal say it is unfair and unreasonable to expect states to bring down their taxes and bear heavy loss of revenue. Telangana and Chhattisgarh have even asked the Centre to scrap cess on fuel in order to restore prices to the 2014 level. In an unsavoury war of words, the Union Government and the Opposition-ruled states are accusing each other of fleecing hapless end-users.
The ground realities suggest that no political party can afford to take an ambiguous stand on fuel prices and taxes as their fluctuations impact the voting public on a daily basis. It is no mere coincidence that petrol and diesel rates are usually lowered or kept unchanged whenever an election is around the corner and then raised once the polling ends. Both the Centre and the states chose to maximise their gains from the sale of fuel during the better part of the two Covid years. Though the pandemic has subsided, the Russia-Ukraine war has hit global crude oil supplies in recent months. According to a report of the Petroleum Planning & Analysis Cell of the Ministry of Petroleum & Natural Gas, India's crude oil imports increased by 14.3 per cent during April 2022 as compared to the corresponding period of the previous year, even as the production of indigenous crude oil last month fell by 0.9 per cent in comparison with April 2021.
With the political battle lines so sharply drawn, it is naïve to expect Central and state governments to agree on a fuel tax structure that minimises the damage on the revenue front. But they can certainly do a better job of balancing economic considerations and political compulsions to keep the wheels of growth moving rapidly.
