English Article

Fuel Price Optics

Levies must be cut further to offset the effect of the continuing surge in global oil prices

The Centre finally decided last week to relent and act on the advice of monetary policymakers by cutting the excise duty on petrol and diesel by `5 and `10 a litre, respectively. The duty reduction, announced on the eve of Deepavali, immediately helped lower the retail prices of the two fuels by at least about 5% and 11%, respectively. And on the Government’s urging, more than 20 States and Union Territories also reduced the VAT levied on the fuel products, thereby enhancing the relief provided to consumers from record pump prices. While the Centre asserted that the decision was to impart a fillip to the reviving economy, as well as easing inflationary pressure, the political significance of its timing was hard to overlook, coming a day after the ruling BJP suffered electoral reverses in some legislative and parliamentary bypolls.