Fuel Hit Century : Explained

The Prices of petrol and Diesel have crossed the 100 rupees per litre . The prices of fuel had increased significantly in the last few months 

In this post today You will know the exact reason for the increase in fuel prices 

PAST AND PRESENT :

In 2013 When the price of crude oil (Where different fuels are extracted from) was  at a high price 101 dollars per barrel the price of petrol in india was 63 rupees  approx per litre .But today in 2021 a Barrel of crude oil costs 74.65 dollar and the price of petrol is above 100 rupee mark 

DECODING : 

The reason is due to increase in taxes levied by the government .Taxes are the major contributor for the hike in fuel prices 

The Factors that influence fuel prices are :

1.) Crude oil , Shipping charges , processing charges to dealer 

2.) Excise duty charged by Government 

3.) Dealer commission to Gas station 

4.) Vat imposed by State government 

And the calculation is simple :

 The government of India charges Rs.32.90 excise duty and state government   (Delhi) charges rs.23.43 of tax on per Litre of petrol  

 PRICE BREAKUP

WHY GOVERNMENT DOES THIS 

India Has Witnessed a 2 waves of Covid 19 in the last few months . The covid waves impacted everyone from government to business . The Tax collection of government was disturbed which led to a Fiscal deficit 

Fiscal deficit is a condition where the government spends more than it earns.

The current Fiscal Deficit of the Indian government is 9.5%

The Taxes that are collected on Fuel play an crucial role on the income of the government . When India goes on fiscal deficit , the taxes imposed on fuel prices help to ease up the loss caused due to pandemic 

So the increase in fuel prices are a way to compensate for the lost taxes and manage the fiscal deficit .

Why GST is not imposed 

The reason is simple imposing GST on fuel prices may help the consumers but it will the leave the government under a heavy burden to make up for the lost taxes and when the fiscal deficit is already at 9.5%

Hope You Understood the reason for increase on fuel prices 

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--Team The frenzied 

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