Latest fuel price cut is no more than a token gesture

Having enough funds in government accounts is fine but it should not be done by denying the public the due benefits of the global oil price fall

The Monday’s cut in fuel prices is not marginal but extremely nominal. A 4 paise per litre reduction in petrol price and 3 paise cut in diesel prices is too small to be considered even token gesture. Now petrol in Delhi would be available for Rs 59.95 per litre instead of Rs 59.99 earlier. Similarly, diesel will cost Rs 44.68 for a litre against Rs 44.71 previously. The government’s decision to raise excise duty on petrol by Re 1 per litre and on diesel by Rs 1.50 may simply seen as a move to deny consumers full benefit of falling international oil prices. Global oil fell 4 percent on Monday as weak economic data from China, the world’s largest energy consumer, weighed on prices. Brent April crude futures were down $1.44, or 4 percent, at $34.55 a barrel at 1451 GMT. The March Brent contract, which expired on Friday, settled at $34.74 a barrel. Going by the last fortnight’s trend when international fuel rates fell by $4 per barrel, the reduction should have been Rs 1.04 per litre in petrol and Rs 1.53 in diesel. But the government seems to be in dire need of money. Otherwise it would not have been the third excise duty hike in a month in an attempt to get the government additional Rs 3,200 crore in during rest of the current fiscal. If we combine the two earlier excise duty hikes in November and December 2015, the government is expected to get Rs 17,000 crore in additional revenue. Having enough funds in government accounts is fine but it should not be done by denying the public the due benefits of the global oil price fall.

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