New Delhi, May 21 (IANS): With transport fuel prices in Delhi and Mumbai touching an all-time high, industry chambers, Ficci and Assocham, on Monday called for the government to urgently reduce fuel excise duties. It also urged the government to bring automobile fuels under the purview of Goods and Services Tax (GST).
The price of petrol per litre in Delhi on Monday under the dynamic pricing regime touched a record high of INR 76.57, already having beaten on Sunday the previous high of INR 76.06 in the city on September 14, 2013. On Monday, in the other major cities like Kolkata and Chennai, the price of the fuel rose to near five-year high levels, at INR 79.24 and INR 79.47 per litre. Diesel in the national capital on Monday went to its highest level of Rs 67.57 per litre.
“At a time when the Indian economy is on a recovery path, rising oil prices are again posing a high risk to India’s economic growth trajectory,” a Ficci statement said here.
“Over the last few years, falling oil prices contributed significantly towards improving the health of the economy. With global oil prices once again spiralling upwards, the macroeconomic risks of higher inflation, higher trade deficit and pressure on balance of payments with attended consequences for the Rupee value have once again surfaced,” said Ficci President Rashesh Shah.
“While cut in excise duty on petrol and diesel may provide temporary relief to the consumers, the sustainable solution lies in the automobile fuel coming under the Goods and Services Tax, which can happen only after the Centre and states together reduce their dependence on the fuel considerably,” said D S Rawat, Secretary General of Assocham.
He said, rising crude prices coupled with weaker rupee with cascading impact on inflation pose “a big challenge for the Indian macro picture and ironically, there is a little that can be done in the short term.”
In the long run, India needs to rework its energy security and ensure that petrol and diesel do not remain a huge revenue resource. Rather than being a revenue source for the government, the auto fuel should drive the economic growth, Rawat added.
Even though oil is now considered less of an independent driver of business cycles than before, the State Bank of India (SBI) on Monday said the recent surge in crude oil prices is likely to impact the country’s imports and stretch the ongoing fiscal’s current account deficit (CAD) to 2.5 per cent of GDP.
He pointed out that the government’s latest Economic Survey 2017-18 has estimated that for every $10 per barrel rise in crude prices, while GDP growth will reduce by 0.2-0.3 percentage points, the current account deficit will increase by 0.4 percentage points and wholesale inflation will go up by 1.7 percentage points.
Ficci also noted that when the global oil prices were down, the government had hiked excise duty on fuel nine times between November 2014 and January 2016, but had reduced it only once in October 2017.
The price of the Indian basket of crude oils, composed of 70 per cent sour grade Oman and Dubai crudes and the rest by sweet grade Brent, has gone upwards of $72 a barrel in May, after rising to an average of $69.30 in April 2018. It averaged $47.56 and $56.43 per barrel respectively during the last two financial years.
