If the government is to listen to the suggestion forwarded by the PHD Chamber of Commerce, petrol and diesel prices will fall by Rs 9-10 and that would definitely be a decision very welcome to one and all. Prices of petroleum products in India should be in sync with the decline in international crude oil prices, PHD Chamber explains. Dr D K Aggarwal, President, PHD Chamber of Commerce and Industry, adds that all the movement in international crude oil prices must be considered for domestic price changes.
The international crude oil prices declined significantly from USD 63.27 per barrel as on 6th January 2020 to USD 31.13 per barrel as on 9th March 2020, while petrol prices in India (Delhi) decreased from Rs 75.69 to Rs 70.59 during the same period. However, a significant 50% fall in the international crude oil prices has only resulted in a 7% decline in the domestic petrol prices, said Dr Aggarwal.
He adds that the build-up of petroleum product prices because of various taxes, duties and commissions (fixed excise duties at Rs 19.98/Litre and VAT at Rs 15.25/Litre in Delhi) is so high that any significant crude oil price decline is also not reflected in the prices of petroleum products in India.
At this juncture, we suggest to reduce Excise duties and VAT on petroleum, diesel, and allied products by at least 25%, to bring down the prices of petroleum products, which will be a big relief to the industry, will boost and kick start economic growth, while reviving the spirit in the economy, said Dr Aggarwal.
The India automobile industry has been struggling with the worst sales slowdown in decades across almost all vehicle categories. The reasons cited behind the slowdown include the upcoming BS-VI transition and low consumer sentiment due to the overall slowdown in the economy.
All of the vehicle manufacturers in India are currently in the process of updating their product lineup to BS-VI emissions standards which has led to a substantial increase in vehicle prices as well.
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Your Maruti Suzuki Ciaz today would get a full tank in Rs 3,115 (based on the petrol price in Noida on 12 March). If the suggestion on excise duty and VAT reduction is considered by the government, petrol prices would reduce by about Rs 10, which means your Ciaz would get a full tank in Rs 2,685. (Savings of Rs 430 per full tank)
The cost of running would reduce and the increase in prices that have come about because of BS-VI transition would be quicker to recover. These factors can bring about a positive change in consumer spending.
Dr Aggarwal also suggests that these reduced prices will help lower inflation and will boost overall revenue and benefit the government, industry, and economy.
