The price of petrol and diesel has been on fire since last 19 days. For the first time in Delhi, diesel has become more expensive than petrol and has crossed Rs 80. In such a situation, inflation is expected to increase. Despite this, the continuous increase in prices of petrol and diesel does not seem to have an immediate effect, but experts say that there is a danger of rising inflation as demand increases in the economy. This increase in prices may continue for the next few days. According to economist Arun Kumar, the reason for this is the increase in excise duty by the Center and VAT by the states.
He says that the rise in prices of diesel is usually due to high inflation as the trucks used for freight are driven by diesel, but the situation is slightly different. Despite the price of diesel reaching a record high, the market demand is very low. There is no danger of rising inflation immediately. Only when demand increases will the price increase. Perhaps, this is also why the government is silent on the hike in the price of diesel. This will also help prevent deflation (contraction).
64 percent of the price of petrol and diesel, that is, about Rs 50.69 per liter customers are paying tax. The central excise duty on petrol is Rs 32.98 and the state sales tax of Rs 17.71. The tax on diesel is 63 per cent of the price, which is around Rs 49.43 per liter. It has a central excise duty of Rs 31.83 and a state VAT of Rs 17.60.
Energy expert Narendra Taneja pointed out that the Corona crisis caused a huge decline in GST collections. In such a situation, the best way to increase tax collection with the central and state governments is the increase in excise and VAT on petrol and diesel. Despite this, the central and state governments are suffering. The reason for this is the big drop in demand for petrol and diesel. The total tax collection from this item is much less than before the Corona period. Unless the demand for fuel increases in the market, it will not be possible to make up for the loss.
Anuj Gupta, Deputy Vice President (Research and Commodity), Angel Broking, said that the price of crude in the international market is hovering around $ 40 per barrel. No more major shortages are expected. The average price of crude oil in the Indian basket has been around 60 to 65 dollars. The current rate is very low. There is no possibility of major reduction in such crude oil. In such a situation, if the general public is given relief from the rising price of petrol and diesel, the government will have to cut excise and VAT.