Have retail fuel prices of petroleum products—petrol and diesel—been as high ever? The answer is no. But then we live in uncertain times. The US sanctions on Venezuela, where elections disrupted the oil output, and the impending threat of sanctions on Iran have no doubt pushed up crude prices. The Indian Oil Corporation, the biggest importer from Iran, is bracing in anticipation of what may come.
But does this backdrop justify the tenth consecutive hike, which has left the common Indian gasping? The NDA government has had a long cushion after global oil prices crashed with increased output. That comfort was never passed on to the consumer. Instead, it was used to ramp up revenues, which increased by `1,64,654 crore between 2013-14 and 2016-17, nicely covering up for the dipping parameters on all other counts. The excise duty on crude, as it stands today, is nine and four times more, on petrol and diesel respectively, from what it was before the NDA took over in 2014. Cash-strapped state governments have also levied their own taxes to make up for shortfalls elsewhere.
The never-before seen retail prices are the result: diesel was at `73 a litre, a level that would have been seen as extremely costly for petrol just the other day; petrol was at a princely `85. And global oil prices are hovering around $79.53 a barrel. The petroleum minister, after making some illegible noises about government intervention, left it to Law Minister Ravi Shankar Prasad (why him no one knows) to offer unconvincing rationalisations about long-term benefits.
For, in the short term, the economy is under severe strain, commodity prices are levitating at unheard-of level. Consumers, with not much left in their hands, can spend little. So what will drive the economy? It seems a vicious cycle. The government must intervene to bring down taxes, since the oil companies are not agreeing to lower prices. With our banks in the state they are in, manoeuverability is low. Even so, the first signs of economic revival must not be sacrificed for this.