petrol/diesel

cess

excise

petroleum products

Maharashtra government

Heavily taxedPetrol per litreDiesel per litreThere’s no drought, but the state government charges Rs 3 ason petrol and diesel; another Rs 3 cess is charged to compensate forlosses through highway liquor shops ban, which the Supreme Court has diluted to a large extent.As spiralling petrol and diesel prices continue to go through the roof, each day looks worse than the previous. On Wednesday, in Mumbai, petrol cost Rs 85.03 per litre and diesel Rs 72.80, both highest ever in the country. For what is considered as a basic necessity today, why is it that Mumbai is on top of the price hike list, with citizens paying through the nose for going about their lives? The answer: the city pays the highest VAT (value added tax) and surcharge onin the country.Apart from 26 per cent VAT on petroleum products, which in Delhi is 21 per cent,imposes a surcharge of Rs 11, which includes a drought cess of Rs 3 per litre, first imposed in 2015. The surcharge also includes Rs 3 that the state government imposed to recover losses caused by the Supreme Court’s February 2017 order to impose ban on liquor shops on highways.The state didn’t experience any drought in 2016-17 and 2017-18, but the cess imposed in the name of disaster continues. As for the compensation for losses through highway liquor stops, the Supreme Court, in November 2017, excluded highways passing through municipal areas and gram panchayats with more than 5,000 inhabitants. Yet Rs 3-cess continues.The state government is not alone in fuelling Mumbai’s angst. The Centre is equally to blame. In 2014, the excise on petrol and diesel was 8 per cent. Within four years, it has gone up to 25 per cent for petrol and 22 per cent for diesel. The hike was, of course, to recover losses; this time caused by low crude prices which were around $ 45 per barrel.When the Narendra Modi government assumed office in 2014, crude stood at $ 105 per barrel, with petrol costing Rs 72 per litre; today, even though crude is around $ 80 per barrel (cheaper by 24.52 per cent), Mumbai is still being penalised. BJP, in 2010, had criticised the Manmohan Singh government for setting petrol and diesel prices free.Perhaps the only way the BJP government could justify the price hike is by passing the buck to ‘rupee’; it has declined almost 13.7 per cent since 2014. A dollar then was Rs 58.72, today it’s Rs 68.06; we are paying more for every crude barrel.According to a report released by the State Bank of India on Monday, surging crude prices is bad news. Titled ‘Oil on boil: It’s time we understand oilnomics better’, by chief economist Soumya Kanti Ghosh, the report suggests that increase of $ 10 per barrel will increase the import bill of the country by $ 8 billion and it is indeed bad news for a country that imports 82 per cent of its crude.Indian National Congress leader Veerappa Moily once said, “Saving petrol is saving India’s money. This is a sense of patriotism…” Cost of motoring, however, can’t be separated from household budgets today. Chetan Apte, a Tata group employee and a resident of Mulund, said, “When petrol was around Rs 75 per litre, my monthly fuel expense was around Rs 2,600. Within days, it has shot up to Rs 3,000.” Even Nigel Buthello finds the hike exorbitant. Working with an ad agency in Parel, he chooses his motorcycle over trains. “Instead of passing down the taxes to us, the government should bear the burden. Though fuel prices are hurting my monthly budget, I still find my bike cheaper than taking a cab.”“Prices have gone up by around 14 per cent. Fuel cost is the major cost for car rental companies, and, unfortunately, we ask our customers to absorb a part of the hike through fuel surcharge,” said Sunil Gupta, CEO and MD of Avis India Car Rental Company, which has more than 5,500 cars in its fleet.A sector already affected by GST (goods and services tax) is now reeling under diesel costs. Bal Malkitsingh, chairman of the core group of All India Motor Transport Congress, said, “Diesel is a major component of our operating cost. It used to be around 60 per cent; now it’s 65-70 per cent.” The association, he said, has submitted demands to the government. “If there’s no action by July 20, we will go on an indefinite strike. The Centre must bring all petroleum products in GST ambit,” he demanded.Like Avis India Car Rental Company, the Mumbai Bus Owners’ Association cannot ask its customers to absorb the price hike. “In 2015, diesel cost less than Rs 50 per litre; now it’s Rs 72. How can we operate in such an environment? We can’t pass on the entire hike to our consumers; we have to absorb some of it,” said Harsh Kotak, the general secretary of the association. While the Mumbai Bus Owners’ Association will decide its future course at a meeting on June 1, the Maharashtra State Transport Corporation (MSRTC) is all set to hike its prices. “We are considering fare hike because diesel costs much more than last year. This has brought upon us a burden of Rs 460 crore,” said a spokesperson.For a change, fuel prices are changing faster than politics. The burgeoning prices have invited backlash from Samana; the Shiv Sena mouthpiece. In a published statement, the leader of opposition in state assembly, Radhakrishna Vikhe-Patil said, “The government should immediately reduce taxes on petroleum products and give relief to the common man.” Meanwhile, the Mumbai Congress is organising a bicycle march to the collector’s office on Thursday. Mumbai Congress president Sanjay Nirupam said, “We are ready with a memorandum congratulating Modi government for giving India highest fuel prices in the world.”