Fuel price cuts needed

Fuel ( Patrol, Diesel ) is a luxiary items for PM/FM, and these are the big source of revenue to be distributed as Freebees to Crores and crores of Citizens. In India there are many People who are Rich but are not paying any taxes on the pretext of one reason or other. Such people must be brought under Tax net. Govt must give a reasonable relief to Non Pensioner Senior Citizens. more  

Let me chime in. . . .GoI subsidizes a large chunk of population in the lower income bracket by the taxes it collects from the market. For example, 10 crore women, mostly rural, have free (or at a nominal price) cooking gas (6 cylinders per year). So where is the money coming from? It is from the market where petrol price is kept a bit artificially high. Similarly, public transportation entities are dependent on diesel which is heavily subsidized by the petrol price. Guess what, in the western countries diesel is costlier than petrol, whereas in India it is the opposite. more  

I think The Govt is waiting for the huge loan payoff that was left behind by Congress. If they bring down fuel price, it will have a positive impact on essentials price falling down due to cheaper transportation cost. more  

Why Fuel Prices Have Not Fallen in India Despite Crude Price Decline Despite the global fall in crude oil prices, fuel prices in India have not decreased as expected. Here are several reasons why this may be the case: High Taxes on Fuel: A significant portion of the fuel price in India is attributed to taxes levied by both central and state governments. In fact, taxes can account for nearly 60% or more of the total retail price of petrol and diesel. Central Excise Duty and State VAT make up a large chunk of the final price consumers pay. While crude oil prices have fallen, these taxes have remained unchanged. The government often views fuel tax revenue as an important source of funding for various welfare programs, infrastructure projects, and fiscal consolidation. Cutting fuel prices without reducing taxes could hurt these revenue streams. Revenue Needs of the Government: Fuel taxes are a significant source of revenue for the government, especially in a country like India, where the budget deficit is a concern, and fuel is taxed heavily to support various developmental activities. When the price of crude oil rises, the government may increase taxes to offset the rise in the retail price, maintaining its revenue targets. Similarly, when crude prices fall, the government may retain the high tax rates to ensure continued revenue generation, especially if fiscal needs are pressing. Currency Depreciation: The Indian Rupee (INR) has depreciated against the US Dollar over the past few years, which means that even if the global crude oil prices fall, the effective cost of importing crude may not decline proportionally. A weaker rupee makes crude imports more expensive, which limits the extent to which the fall in global crude prices translates into lower retail fuel prices in India. For example, a fall in crude prices by 15-17% might be offset to some extent by a depreciation in the rupee, thereby reducing the potential price benefit for Indian consumers. Buffer for Future Price Fluctuations: The Indian government and oil marketing companies often maintain a price stabilization buffer to account for future price volatility in global crude markets. When global oil prices are high, these companies may sell fuel at a higher price to create a buffer. When prices fall, they may not immediately pass on the full benefit to consumers, instead retaining part of the benefit for future price fluctuations. This is done to avoid sudden shocks to the economy in case global oil prices spike again, maintaining a level of stability in the local fuel market. Political and Fiscal Constraints: In an election year or in regions with strong political influence, governments may choose to retain fuel prices high to maintain fiscal health, even if global prices fall. They may prioritize other fiscal measures, like subsidies for low-income groups or direct benefit transfers, over direct reductions in fuel prices. Political considerations often play a significant role in fuel pricing. For example, cutting fuel taxes or reducing fuel prices may be seen as a short-term measure that could affect state revenue generation, especially in states with heavy dependence on fuel taxes. Oil Companies’ Pricing Strategy: Oil marketing companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum follow a pricing mechanism that is a mix of market-based dynamics and government controls. They may choose to keep prices stable or raise them gradually in order to maximize their profit margins or absorb price shocks from currency fluctuations, even when crude oil prices are declining. The decision to pass on the benefits of reduced crude prices is often a strategic business decision, and it may take time for companies to adjust prices fully. more  

Ruchika, you are absolutely right. Some may think that if fuel prices are reduced, it may affect development projects. It is not right since development projects are from the taxes collected from the fuel prices which the consumer is not asking to reduce. The oil companies - both the importing and refining companies are making a huge huge huge profit. In fact, they are even buying at much less than the International crude oil price. The Govt. has given them free hand to fix the fuel prices based on the International price. But, they don't! Govt. cannot say anything since private companies are involved in this business. I don't want to say more since this may turn out to a political issue. If anyone take it up, I can provide evidences from the research I have done for last 10 years to show how much profit the oil companies make by looting the public!! more