Former Prime Minister Manmohan Singh spent his entire tenure in balancing the astronomically high crude oil price and its repercussion on India’s Motor Fuels (Petrol and Diesel) price. Crude Price ruled in the range of $100/bbl for nearly a decade. He did his best to ensure that despite high crude oil price, the local price remains affordable to common man without paralysing fiscal deficit. He gave subsidies whenever needed; in June 2008 when crude oil price touched historical peak of $147/bbl, petrol was available in India for Rs 51/liter.
PM Modi was born with the shear ‘Luck’, crude prices which were hovering around $104/bbl, when he took the reins of Nation, it crashed down to $51/bbl and present NDA Government is enjoying the Luxury of stable crude oil prices since last 39 months. Shockingly instead of providing relief to the common man, this Government has preferred to charge Phenomenal Excise Duty, VAT by making price of petrol Rs 79/ liter and diesel Rs 60/ liter with a marginal variation across states (depending upon their VAT). Story begins here, now prices are almost rising every day and by the time you read it might have crossed Rs 80/liter.
I have repeatedly voiced in my media panel debates and interactions that petrol pricing has been the biggest fraud played on Indian public by Ministry of Petroleum and Natural Gas (MoPNG), Govt of India which never transparently gives the reason why the petrol from Rs 26/liter at refinery gate price escalates to Rs 78/liter at the nozzle of retail outlet. Erstwhile, NDA Govt has changed the formula of compensating OMCs (Oil Marketing Companies) from 12 per cent post tax return to Administered Price Mechanism (APM) in the year 2000. As a result barring petrol, diesel, LPG and kerosene all petroleum products were decontrolled. Pricing of such products were left to individual OMCs. Govt. further brought 4 products under Market Determined Price Mechanism (MDPM). However, it never happened in practice and continues to be decided by the Babus sitting in Shastri Bhawan and what I jokingly call it remained “Minister Determined Price Mechanism (MDPM).”
Government uses strange logic for crude price hike; “Dollar has appreciated” or “IPP (Import Price Parity) is high” etc., it has recently resorted to another gimmick called “DPR (Daily Price revision)”, since July 1, 2017. Consequently in last 2 months petrol price has shot up by Rs 6.20/liter and diesel price by Rs 3.70/lt. In absence of any trigger like crude price hike or Rupee has weakened, such increase is illogical. MoPNG has pocketed Rs 20,000 cr in last 2 months, with this ‘slow poison’ called DPR. Earlier fortnightly Price revision used to create hue and cry and therefore, Govt opted to such practice. Surprisingly, prices are been revised even on Saturday and Sunday or when National and International markets are closed.
Petrol prices have always been a major source of revenue to the ruling Govt. Sometimes in late 90s it used to constitute 66 per cent of the Govt ‘s revenue collection, till higher crude prices made a dent into it. From 2003 to 2011, Govt could mop up barely Rs 1.53 lakh crore from petro revenue, which has shot up to Rs 3.53 lakh cr in a single year 2016-17 only.
Higher petro prices are major source of inflation; be it farmer, public/private transportation, resulting into higher commodities and vegetable prices. Today consumption of diesel by Fuel guzzling SUVs is negligible but students, office goers, small businessmen, the effect is adverse. Another dope given by the Petroleum Ministry is that if excise duty is reduced the OMCs will incur losses. This is a blatant lie as no oil company has ever incurred loss in any financial year. On the contrary they have posted huge profits, paid hefty dividends to the Govt being majority shareholders and they issued Bonus shares too.
All these narratives are just to fool public at large; Government’s sole intention is to fill their coffers as every penny is going into burgeoning black hole called ‘Fiscal Deficit’.
It is indeed shocking that petrol and diesel both have been deliberately and purposefully kept out of GST because maximum rate chargeable would have not been more than 28% (Highest slab). States like Maharashtra are charging a Krishi (agricultural) cess on petrol to the extent of Rs 9/liter, which continues till date though no relief has been provided to farmers.
OMCs are den of corruption; money is channelised from sales officers to chairmen, for Postings, Transfers and goes up to Ministry. You must not have forgotten how then Petroleum Minister Satish Sharma distributed LPG agencies to his driver and butler. Scams in ONGC for rig hiring, gas theft are in news from time to time. GSPC (Gujarat State Petroleum Corporation) spent Rs 20,000 cr of public money without exploring a tonne of gas during the current PM Shri Modi’s tenure as CM of Gujarat.
Dealers /Retailers are another screwed lot in this pricing game, Owning a Retail outlet or Petrol Pump was a matter of pride 15 years before, now it has become liability, they get a meager commission of Rs 0.66/liter on petrol and Rs 0.51/liter on diesel (Highest slab) which barely suffice administrative expenses, over and above this daily price revision has broken their back.
There is an urgent need to lower excise duties and bring fuel under VAT, which will curb Inflation and will give desired boost to the economy and relief to common men. Recently Petroleum Minister Dharmendra Pradhan has been elevated as Cabinet Minister just for his ability to raise more and more money from Oil sector. Public is crying under the weight of exorbitant fuels prices, which has hurt every stakeholder, consumer, Industry and dealers.
Selling of HPCL to ONGC is another gimmick by the Govt. This is nothing but synergy of incompetent and inefficient corporate in upstream and downstream.
Govt is also misusing its majority in Parliament to enjoy this loot forgetting the same very ruling party used to descend on streets even for Rs1/liter rise in petrol price or Rs 50 /Cyl while in opposition. Today opposition is fragmented, unable to raise voice against this daylight robbery, and public is suffering from “Boiling Frog Syndrome” and will ultimately succumb to this arm twisting, barring a few public spirited media channels while majority have opted for “Mute Mode” on this burning issue.
Ravi Srivastava
