India: Cut to petrol prices after technical glitch fuels public anger, govt scrambles to rein in price hikes

  • State-run oil marketing company (OMC) Indian Oil Corp. Ltd on 31 May 18 cut diesel and petrol prices by INR0.05 and INR0.07 per litre, respectively, after automobile fuel prices reached a record high on 29 May 18
  • The petrol price cut followed Indian Oil’s move of reducing petrol and diesel prices by INR0.01 per litre on 30 May 18, a move that was mocked by the opposition.
  • Indian Oil Corp’s website, the key source of fuel pricing information, showed that petrol and diesel rates had been cut by INR0.60 and INR0.56 a litre, respectively, on 30 May 18 morning. By 11 am, the company clarified that the wrong prices had been initially posted.
  • Incidentally, the error was confined to the website and wasn’t transmitted to dealers — so consumers were charged the right price. IndianOil also escaped social media censure with the brunt of the ire being borne by the government.
  • Prices vary widely across India as states impose their own levies since fuel is not under the purview of the goods and services tax (GST).
  • Retail prices of petrol and diesel in India also track the global prices of these auto fuels, not crude, though they are broadly linked to crude oil price trends, which have firmed up. With dynamic fuel pricing introduced in Jun 17, the National Democratic Alliance (NDA) has maintained that it has no role in pricing.
  • Petrol prices were deregulated in Jun 10 by the Congress-led United Progressive Alliance (UPA) government. The Prime Minister Narendra Modi-led NDA government decontrolled diesel prices in Oct 14.
  • These two days of minor price cuts came after prices were raised daily since 14 May 18 after three state-run OMCs—Indian Oil, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—refrained from increasing prices since 24 Apr 18 while the Karnataka election campaign was going on.
  • With fuel prices reaching a record high in India, there has been a demand for an excise duty cut on petrol and diesel ahead of 2019 Lok Sabha elections. However, the NDA has signalled its intent to stay the course on fuel pricing reforms and said that it was working toward a “long-term solution”.
  • The centre is in favour of bringing petroleum products under the new indirect tax regime. At present, petroleum products are included under the goods and services tax (GST), in line with amendments to the Constitution.
  • But GST will start to be levied on petroleum products only once the GST Council—the federal body comprising the Union and state finance ministers—approves the move.
  • Speaking to Times NOW, petroleum minister Dharmendra Pradhan said the government was likely to intervene to control the increase in petrol prices.
  • BJP and RSS leaders also said that state governments can reduce taxes, the Centre can cut excise duty and also ask oil companies to bear the fall in profits.

External Link: https://www.livemint.com/Industry/WfiQCjIJp1lFgqOphbsZ2H/Petrol-price-cut-by-7-paise-diesel-price-by-5-paise-after.html

External Link: https://economictimes.indiatimes.com/news/politics-and-nation/1-paisa-cut-in-petrol-prices-fuels-public-anger/articleshow/64393716.cms

External Link: https://economictimes.indiatimes.com/news/politics-and-nation/1-paisa-cut-in-petrol-diesel-prices-congress-takes-jibe-bjp-rss-mull-gst/articleshow/64393831.cms

31-May-2018


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