The prices touched a new high, with Mumbai paying the maximum among the four metros. While petrol costs Rs 88.12 a litre, diesel is priced at Rs 77.32 a litre. The fuel prices are likely to go up further as the rupee hit yet another all-time low of Rs 72.18 against the US dollar. India imports about 80 per cent of its crude oil, and the falling Indian rupee will make the imports costlier and lead to a rise in fuel prices.
The skyrocketing increase in the prices of petrol and diesel over the weeks and the unprecedented decline in the value of rupee are the worrisome developments for the Modi-led BJP government, which can ill-afford to be a mute spectator by attributing them to external factors. Agreed, there are external factors such as fall in oil output, high demand for the dollar and crippling economic sanctions against Iran by the US which have contributed significantly to a discernible decline in the value of currencies of developing economies and increase in fuel prices. But it is incumbent upon the Centre to unleash measures to mitigate the negative fallout arising out of external economic developments on the domestic economy. Ballooning current account deficit in the face of ever-increasing hike in fuel prices is a cause of serious concern. Bringing petrol and diesel within the ambit of GST by evolving a consensus with States brooks no delay.
The initiative to promote electric vehicles is a welcome step, especially with mounting inflationary pressures on account of a relatively devalued currency, inflated fuel import costs and a need to control the fiscal deficit. It is important that the feasibility of an alternative fuel be evaluated. Electric vehicles may well be a viable option, keeping in view the associated benefits — nil fuel cost and zero hydrocarbon emission. Besides being cost-effective and eco-friendly, e-vehicles are easier to maintain and have lower noise pollution levels. However, a varied infrastructure backed by high investment is required to establish electric fuelling/recharge stations and tap economical sources to overcome the shortage of power. It is also time to find out an alternative to petrol.
Ethanol is an alcoholic renewable that is made of the same kind of alcohol you find in alcoholic beverages. Ethanol is then mixed in various degrees with traditional petrol. The production and use of ethanol could reduce greenhouse gas emissions anywhere between 52 and 86 per cent. Additionally, the infrastructure already exists to deal with ethanol, because it is the equipment used to store and dispense gasoline, just with modifications to some materials.
Of course, the voters will be perturbed if they have to pay a much higher price for fuel than is rational, owing to high taxation. The same voter did not get fuel cheap when crude oil prices fell in the World market. To tell the voters now that the government is looking at the crude oil prices and exchange rates is like rubbing salt on the wound.
(The views expressed by the author in the article are his/her own.)