Petrol, diesel prices scale new highs on rupee woes

Marco Green
September 12, 2018

Two senior Finance Ministry officials emphasised that the government is conscious, anxious and vigilant about the falling value of rupee but is not alarmed, and said that markets need not panic about the depreciating rupee. "If we expand the tax base in the same proportion as we did past year, then non-oil GDP ratio will go up", he said.

"Our aim should be to raise non-oil tax to GDP ratio by 1.5 per cent in the next 5-6 years", he said, adding such a trend will lower the dependence on tax revenue from oil.

"The Centre has shown no concern by ruling out a cut in these taxes", Mr. Naidu said. "National fiscal deficit determines bond yield and with a higher fiscal deficit the rupee becomes shakier", the official said. "This is the real effect of oil tax cut".

The official also said the government can not cut defence expenditure or expenditure on salary or on debt servicing as it will mean a cut on development expenditure. The official also said the government has not resorted to cutting development expenditure in order to achieve fiscal deficit target.

Fuel prices in Delhi are the cheapest among all metros and most state capitals due to lower taxes.

The state had slashed Value-Added Tax on prices of petrol and diesel by Rs 2 and Re 1 respectively in October.

Later, amid the constant rise in the prices of petrol and diesel, BJP president Amit Shah on Monday met Oil Minister Dharmendra Pradhan, PTI reported. The VAT rates are also ad valorem which means every time the product price goes up the taxes also go up.

Opposition parties like the Janata Dal-Secular (JD-S), Samajwadi Party (SP), Bahujan Samaj Party (BSP), Dravida Munnetra Kazhagam (DMK), Rashtriya Janata Dal (RJD), Nationalist Congress Party (NCP) and Maharashtra Navanirman Sena (MNS), led by the Congress party, took part in the protests. While other states like Rajasthan and Andhra Pradesh chose to reduce taxes, industry experts suggest moving to GST could be a way forward. While petrol prices have seen dramatic increase in Delhi and Mumbai, it is in the city of Parbhani that the fuel price is at the highest-level in India. "Right now, bringing petrol under GST is an idea and a possibility", he explained.

Other reports by Click Lancashire

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