Fuel price hike: Options before Modi government


Fuel price hike: Options before Modi government

Petrol and diesel prices may be coming down a paisa at a time but still remain high. Government says it is thinking of long-term solutions. Some that it has indicated are:

  • GST: Taxes make up over 50% of the cost of petrol and diesel. If fuel is brought under GST, even at a 40% tax rate, the cost will come down significantly
  • Windfall tax: ONGC, which supplies 20% of our crude requirements and has made ‘windfall gain’ from rising oil prices, may be asked to sell crude at lower price to retailers. In return, the government will ask for lower dividend from the company this year
  • Futures trading: You can sign a contract for 100 litres of petrol at today’s price that’s to be delivered a month from now. All it costs is Rs 100. It’s called futures trading and can be done on a commodity exchange. While the oil ministry has okayed it , Sebi has yet to approve
  • Crude discount: OPEC, the oil cartel, sells oil at a higher rate to Asian nations, including India, than it does to Western buyers. It’s called ‘Asian premium’. Government is trying to get other countries on its side and hoping it will get a discount. Read More

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