Rising Fuel Prices

Mar 06, 2021

In the early March of 2021, India saw its highest hikes in fuel prices with petrol prices hitting a record of more than ₹100 per litre and diesel rising to ₹90 per litre in various locations. It is said that petrol was hiked by 37 paise per litre and diesel by 37 paise per litre. So why are the fuel prices rising?

During the pandemic, crude oil prices went record low due to the lowering of demand. However, as vaccines came into the picture, the prices have sky-rocketed again, and this time they have broken all records. As of $40 per barrel in April 2020, it has risen to $63.49 per barrel by October 2020. To add to the crisis, Saudi Arabia has cut its daily output by 1 million barrels. Talking about the national scenario, both, the central, as well as state government, have increased the central excise duty and sales taxes. For example, in Delhi, the combined taxes account for 180%  of the base price of petrol and 141% of the base price of diesel. The rise in taxes is being attributed to being used for development works as the pandemic has hit the economy hard. The union oil minister says that reduced oil production and the oil-rich nations seeking more profit are the major causes of the rise in fuel prices. The finance minister says that the states and the centre will have to work together to bring the fuel prices to a reasonable value.

This rise will majorly affect the small scale start-ups causing them to pay more for the public transport systems. Also, the common man is always the bearer of such hikes. With around 4.6 lakh auto-rickshaws and 60,000 taxis, the fares have been increased by ₹3 for a 1.5 km ride. Also, it is going to create issues for the already disturbed farmer community by increasing the input costs.

Soon after the hike in the prices, various opposition party leaders came up with their own ways to show dissent. The CM of West Bengal, Mamta Banerjee rode an electric scooter in Kolkata to highlight the issue and has offered to cut down the VAT by Re.1 in Bengal given the upcoming polls. President of the INC, Sonia Gandhi also wrote to the Prime minister regarding the hike in fuel prices. Congress also held protests across the nation by riding bicycles. Businessman Robert Vadra also rode a bicycle to his office saying that A/C cars won’t be affordable with the rising fuel prices. In Kerala, various trade unions had called a shutdown which disrupted the normal life in the state. The Transport and Trade union had also called for a Bharat band expressing disagreement over the rise in fuel prices.

This article has been written by Ritu Katkar for The Paradigm

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