Fuel Price Hike: An ever increasing torturous saga

Image Source - instantkhabar.com
Besides the n-number of problems Indians keep on facing each day, the most frustrating and ever lingering of them all is the sky-high price hike of fuels. Just like stock market which keeps on fluctuating every second, nowadays one has to keep oneself updated with the fuel price, because of its unstable and ascending cost. And the month of May, 2018 seemed to be a cut-throat month for the Indians in case of fuels. Funny part about this price hike in fuel is that the countries which buy fuels from India are selling it at a much lesser cost than India itself.

(Prices as on May 1) Image Source - India Today
The price of petrol (as on 27th May, 2018) is a  sky-rocketing Rs. 85.78 per litre in Mumbai, Rs. 77.97 per litre in Delhi (breaking its own previous all-time high record of Rs. 76.06 in 2013), Rs. 80.61 per litre in Kolkata and Rs. 80.95 per litre in Chennai. Similarly, the price of diesel in Mumbai, Delhi, Kolkata and Chennai are Rs 73.36, Rs. 68.90, Rs. 71.45 and Rs. 72.74, respectively. And worst thing is that, the price is increasing on daily basis.


India is a major crude oil refiner and world's third biggest oil consumer, importing 80% more of crude oil (import value is 4.37 millions barrel per day as in 2017), the top supplying countries being Iraq, Saudi Arabia and Iran, i.e. Central Asia, while shipping in oil is done from the United States. On the other hand, Bangladesh, Myanmar, Sri Lanka, Nepal are some of the countries buying fuels from India.

According to the PPAC ( Petroleum Planning & Analysis Cell), India produced approximately 37,800 TMT (thousand metric tons) of crude oil in the year 2014, the total consumption value was 158,400 TMT, which resulted in 77.6% of the requirement to be fulfilled by imports and this trend is continuing till date.

Image Source - marketrealist.com

The Mumbai High Basin (earlier Bombay High) is the primary drilling site the ONGC (Oil and Natural Gas Corporation). Now, from the past few years, thanks to the global warming and other environmental factors, this basin and also the other basins have become mature, leading to the decline in productions. And, since less than half of the crude oil reserves in India are onshore, upstream companies have to look at offshore reserves for productions, which requires technical enhancements, which in return means cost factor comes in. Thus, the upstream companies started acquiring assets overseas, resulting in the increase in the import rate.

Image Source - marketrealist.com


In case of Assam, following table shows the price hike of some cities in a day (from 26th May to 27th May, 2018):

This situation has agitated the people of the states and compelled the All Assam Students' Union (AASU) to stage statewide protests against the steep hike in fuel price on 24th May, 2018. The protesters burnt effigies of the Union Petroleum Minister Dharmendra Pradhan and activists shouted slogan against the BJP-led Union and state governments for not being able to fulfill what they had promised before the 2014 Lok Sabha Election and 2016 Assembly Election, blaming that BJP had used such fake promises as a trick to remove the Congress government. Following the protests, though the government promised that they would take necessary measures, but have failed to do so.


First of all, if we observe the calculating method of fuel in India, we can see that the fuel price is the sum of excise duty (which is collected by the Central government) and VAT (which is collected by the State government as revenue), the dealers' price and the commission derived by the dealers. The government has hiked excise duties on fuels many times over a period of four years, leading to the rise in fuel prices in India. Hence, the NDA government led by PM Narendra Modi is getting Rs. 10 per litre and Rs. 11 per litre excise duty more on petrol and diesel respectively, than what ex-PM Manmohan Singh-led UPA government used to get in 2014. In percentage, we can say that excise duty on petrol has shot up by 105.49 per cent and that on diesel by 240 per cent.

Hence, apart from the mandatory variations in price because of the currency exchange rates, etc., the increased rates of excise duty imposed by the government and the imposing of VAT instead of GST are the reason which are creating such huge difference in fuel prices pre and post 2013-14.

Image Source - livemint.com


Though India is a country where the majority of the population is middle class and most of them don't even know about the calculations behind the fuel pricing. But the respective authorities know and they should strive to work for the solution, since this issue is taking huge toll on the commoners. As discussed above, everything in India (except for alcohol) nowadays is taxed under GST, except the fuels. According to India Today, if we tax the fuels also under GST then we will see drastic change in the fuels prices. Following table shows the petrol and diesel prices, if we impose GST instead of VAT on fuels:

Data Source - India Today
But, in a way, the people should also start taking it as a lesson to stop such extensive uses of their private vehicles and opt for the other modes of transport, especially those families who own more cars and bikes than the number of members in their families. Though many governmental and non-governmental organizations are trying to educate the common lot about the concept of carpooling and bikepooling, through advertisements and posts in various social media, and Delhi has imposed the odd and even system rule, the effect is yet to intensify. Hence, a strict law should be passed by the government of India, regarding the limitation in buying and owning the number of cars and bikes by each family. The use of bicycles also should be encouraged more and the aspiring engineers and scientists of India should be encouraged more to come up with innovative ideas related to vehicles which can run on non-conservative fuels and also alternatives of fossil fuels, so that the consumption ratio of fossil fuels decreases and can be saved for the future and also so that the environment can be saved from the brink of destruction. As we all know, the level pollution is increasing everywhere and Mother Nature won't hold the fossil fuel reserve full for much long. JAAGO INDIA JAAGO!!!

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