The Associated Chambers of Commerce & Industry of India

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Petrol/diesel prices not market driven, but tax driven, Centre, states should cut levies: ASSOCHAM

 

Saturday, September 16, 2017


New Delhi, September 16, 2017:
Consumer is getting restive about a three year high in the petrol and diesel prices because he/she feels the concept of market-determined rates was tampered with by frequent tax hikes when the crude oil prices fell steeply and are ruling at exactly half the level of USD 107 per barrel in  May, 2014 even after  rising in the last three months .  
 
“It is true that the crude oil has shot up by about 18 per cent from USD 45.60 per barrel , taking the pump prices of petrol  in Delhi (for instance) to Rs 70.39 per litre from Rs 65.40 three months ago. The increase in the retail prices is far less than hike in crude oil, but then the consumer is not willing to compare the crude prices of USD 45.60 in June versus USD 54 per barrel today. He/she would confront you with USD 107 per barrel of crude in May, 2014 and the pump price of Rs 71.51 per litre on June 1, 2014.
 
 With USD 107 per barrel, the retail price of auto fuel was 71.51 per litre, then how come it is about the same when the Indian basket of crude is trading at half that level at 53.83 per barrel, the consumers would ask.  If the prices are market determined, the retail prices should have been less than Rs 40 a litre,” the ASSOCHAM note has stated.
 
It said, even though the pricing regime has been linked to market determined rates, a sharp hike in taxes in the form of excise and sales tax or VAT by the Centre and states have distorted the path of reforms.
 
“Consumers cannot be faulted because the reforms cannot be one way. If the exchequer got a windfall on drop in crude prices by additional taxes,  the same must be reduced commensurately,” the ASSOCHAM Secretary General  Mr D S Rawat said.
 
The chamber said while it is true that the government needs resources for building infrastructure and welfare schemes,  over-dependence on petrol and diesel both by the centre and the states would hamper the economic growth.
 
“The impact is already showing on the macro numbers.  The inflation on account of petrol and diesel , year on year, in August, 2017 was in excess of 24 per cent and 20 per cent. This would dent the prospects of interest rates softening by the Reserve Bank of India at a time when the industry needs less expensive funds for investment and servicing over-leveraged balance sheets”.  


 
About ASSOCHAM:
 
ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org
 
For further details, please contact:
 
 Manju Negi
AVDHESH SHARMA   
ASSOCHAM
ASSOCHAM   
011-46550509; +919810910911
011-46550508; +918527639419

 

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