What action should government take about petrol and diesel price?

In my opinion, rising diesel and petrol prices affect almost every sector because transportation costs influence food prices, travel expenses, logistics, and daily living costs. Governments usually try balancing public relief with economic realities like global crude oil prices and tax revenues.

One possible step is reducing fuel taxes temporarily during periods of extremely high global oil prices. Personally, I think strengthening public transportation systems can also reduce dependence on private fuel consumption in the long run.

Investing in electric vehicles, renewable energy, ethanol blending, and alternative fuels may help reduce future fuel dependency gradually. I’ve noticed that fuel pricing debates become highly political because price increases directly affect ordinary citizens emotionally and financially.

At the same time, governments also depend on fuel taxes for infrastructure and development spending, which makes the issue economically complicated.

In my opinion, long-term solutions require energy diversification, better public transport, and stronger domestic energy strategies instead of only short-term price adjustments whenever fuel costs rise.

The government should take balanced action on petrol and diesel prices by reducing excessive taxes, promoting price stability, and encouraging alternative energy sources. Lower fuel prices can reduce transportation and living costs, but the government must also maintain revenue for public services and infrastructure. A balanced pricing policy can support both economic growth and environmental goals.

The government should take balanced action on petrol and diesel prices by reducing excessive taxes, ensuring fair pricing, and promoting alternative energy sources. Stable and affordable fuel prices can reduce inflation, lower transportation costs, and ease the financial burden on citizens while maintaining revenue for public development.

With the price of petrol and diesel scaling new heights, there is concern about what would be the steps taken by the government to control the same. In the report, CARE Ratings says, "...there is little that can be done in terms of influencing the global price, which will be driven by external factors. The currency too is beyond the purview of the government and will be driven by both fundamentals and extraneous forces. The choices are, reduction of excise duty or VAT by the central and state governments or provide a subsidy on these products to buffer price increase."

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Which Is the Relevant Price for India? 

The Indian crude basket is a combination of Oman, Dubai and Brent varieties and the average price in July 2018 was around $73.5/barrel. To this should be multiplied the exchange rate which has been depreciating of late to over Rs71 per US dollar.

Factors which lead to the contribution of hike in petrol and diesel price rise -

1. Government taxes at both the central and state levels are then added besides commission to the dealers for arriving at the final price.

2. The surge in fuel prices is largely attributed to the rise in crude oil prices and high rate of excise duty in the country. Brent crude oil is currently priced over $78/barrel.

3. The recent slump in rupee also has lifted the import cost of crude oil, subsequently raising fuel prices.

4. The central government excise rate is fixed and is around Rs20 per litre on petrol and Rs15.25 on diesel. The VAT or sales tax rates vary from 16% in Goa to 38.5% to 39.5% in Maharashtra for petrol. In case of diesel, it varies from 22% to 25% in Maharashtra to 11.5% in Chandigarh. As petrol and diesel are out of the GST framework, there is no compulsion to lower these rates.

5. "With inflation already rising, especially on the non-food part for both the CPI and WPI, higher fuel prices will mean that the Reserve Bank of India (RBI) would have to take action on interest rates and there would definitely be another rate hike of at least 25 basis points (bps).

In regard of the above issues the government is planning to take the following steps:-

Just as the central government has taken responsibility, states should also take responsibility to reduce VAT, which directly goes into their account. The VAT on fuel goes up to 40%. States are the biggest beneficiaries of all collections. Even if they reduce VAT by 5%, consumers will benefit,” he added. 

The government is mulling over a plan in the backdrop of petrol price touching a record high of Rs 76.24 per litre, rising 33 paise in Delhi. It is the steepest increase since the retailers adopted the system of daily price revision in June, 2017. The price of Diesel rose by 26 paise to Rs 67.57 a litre, which is an all-time high.