A cut in fuel prices appears to be most likely. On Tuesday petrol and diesel prices touched record high which forced the government to rethink its policies on excise duty on motor fuel and look for alternatives to provide some relief to the common people.
In Delhi the price of petrol and diesel touched Rs 76.87 and Rs 68.08 a litre respectively on Tuesday.
It was none other than the BJP national president Amit Sha who gave the indication of the desire of the government to bring down the rocketing rise in fuel prices when he said that the rise was an issue that has made the top positions in the government concerned and it will be addressed within a few days.
“As far as (rising) petrol prices are concerned, the government is taking it very seriously. Tomorrow (Wednesday) the oil minister will be holding a meeting with all the oil companies. The government is looking into the reasons for the rising prices and will certainly come out with a formula to deal with it or resolve the matter in 2-4 days. The oil minister has also informed the people about this today” Shah told reporters.
It can be assumed safely that the decision of reduction of prices of fuel has been passed at the political level while it is being worked out at the administrative level by the departments that are related to the issue – including the Prime Minister’s Office and the ministries of oil and finance.
The Centre was “alive to the rising fuel prices”, Union oil minister Dharmendra Pradhan had opined on Sunday which reflected a possibility of a reduction in excise duty. “Various alternatives are being explored. I hope something will work out soon,” he had told reporters in Bhubaneswar.
The steady rise in the domestic price of auto fuel was attributed to “the unilateral decision of OPEC to reduce production, political instability in Venezuela and the prospect of US sanctions against Iran” by the minister.
Arguments for a “reasonable and stable price regime” in the oil market were made by Pradhan last week in talks with his Saudi counterpart, Khalid Al-Falih.
There were multiple influencers that resulted in the price of the global benchmark crude, Brent, going past the $80 a barrel mark on Tuesday. And instantaneously, the price of refined product prices also rose. Refined product prices are the benchmark for pricing of auto fuel at the pumps. A falling rupee has added to the impact. There is little lee way for the government but to go for an excise duty cut given the non-existence of any chance of the prices of international crude cooling down.
Between November 2014 and January 2016, the prices of oil had fallen drastically at the international level and during that period, the government had made nine hikes in excise duty on auto fuel.
(Adapted from TheTimesofIndiaBussiness.com)