From the past 3-4 months people of India have been experiencing discomfort because of rising fuel prices. So why is it rising? Let’s see everything step by step. So firstly let’s have a look at the price break of petrol in Delhi.(Before 2021 Budget).
| Element | Units | Delhi (Rate) |
|---|---|---|
| Base Price | ₹/Ltr | 28.13 |
| Freight Price | ₹/Ltr | 0.37 |
| Price Charged To Dealers | ₹/Ltr | 28.50 |
| Add: Excise Duty | ₹/Ltr | 32.92 |
| Add: Dealer Commission Avg | ₹/Ltr | 3.67 |
| Add: VAT | ₹/Ltr | 19.55 |
| Selling Price | ₹/Ltr | 84.7 |
Report December 2020
Here are some important things you need to know.
- Brent Crude oil prices in international market is 56$ per barrel.
- 1 barrel = 159 litres, so if we calculate it’s approximately ₹4095 per barrel. NOTE: (this is the cost without refining).
- So, petrol becomes ₹25 per litre.
- In the pandemic the prices of petroleum went down to almost 19$ per barrel, but then too we didn’t get the low price benefits. The reason then behind this was there were lesser tax revenue collection as most of the industries were shut down due to the covid 19 that caused lockdowns. In order to come up and stable the economy the government had to make these decisions.
- Even though the lockdown restrictions has been lifted up now, the prices of fuel have not seen any changes.
Now the most asked question: Why is the price of petrol and diesel so high even when the economy is looking stabled than it was before?
So the first reason behind the hike of the fuel prices is basically upon the huge loss of The Indian Railways that according to my records and research has in occurred about 87% loss in 2020 because of Covid 19. But again, it was reported that the railways will gain profit from freight, so it is again not totally clear that this is the main reason behind the current hike of petrol prices.
The second reason, according to me is price of crude oil that has been rising at a very high pace and it is due to the shut down of most of the Saudi’s supplies. As they are planning to go green in the future.
So after all of my analysis, I’m not that convinced with above reasons with which the government has raised the price this much. The price should and can be minimized to a better amount as earlier too the government had to deal with this kind of high international prices and loss in government sectors. Well, as if for now you guys can relax as the prices of fuel will go down in the upcoming months and the situation will get normal.
Now let’s see what has 2021 budget introduced and why is it not effecting the fuel prices.
KEY HIGHLIGHTS
- Agriculture infrastructure and development cess of Rs 2.5 per litre on petrol and Rs 4 litre levied on diesel.
- There is no change in the prices of fuel as the excise duty has been deducted by the same price of the agri cess tax.
- Excise duty is the only revenue that has registered a growth for the government in 2020-21 at Rs 3.61 lakh crore.
- Prices of petrol and diesel have hit all time highs with taxes accounting for about 57%-62% increase from the last budget.
I know most of you will have a question that what is Agri Cess and why is it? Let me explain you.
The AIDC (Agriculture Infrastructure and Development Cess) is a tax added by the government of India on the Union Budget 20-21. In this the amount ₹2.5 per litre on petrol and ₹4 per litre on diesel has been added to the taxes of fuel, but the government has cushioned it with the excise duty. So there are no changes in the price of fuel despite the new taxes.
Now why is it right? Well, according to the government there is an urgent need to improve agricultural infrastructure so that we can produce more, while also effectively protecting and processing agricultural products. This will ensure an increase in the pay of our farmers.
And I really support this initiative by the government, but before that to happen, we need to fix our farm law issue. click here if you want to read.. Let’s hope everything gets normal and we all start with good progress in the future.
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Superb bro