Economic Survey leaves no escape from fuel price hike after polls

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NEW DELHI: The Economic Survey 2021-22 has flagged rising oil prices and rupee exchange rate – both of which impact fuel prices – without giving any guidance on the need for further reduction in excise duty.
In the backdrop of global benchmark Brent breaching the $90/barrel mark, it is safe to assume pump price revisions will resume once the political expediency of state polls is over on March 10.
Referring to last November’s cut in excise duty on petrol and diesel by Rs 5 and Rs 10 per litre, respectively, the Survey said it was done to bring relief to consumers when oil prices spiked beyond $84 per barrel in October.
The Survey noted that the excise duty cut also prompted states to pare VAT, which extended the relief for consumers.
Simultaneously, the Survey noted that crude prices have been rising in the last few months and the dollar exchange rate was also showing an upward trend, “hovering around Rs 75 per USD which was also impacting the prices of petrol and diesel (prices)”.
But the survey is silent on the fact that the fuel prices are at the same level as they were on November 4 even though oil has risen by $10/barrel or so since then. When the excise duty was cut, oil was hovering around $80, petrol cost more than Rs 100 across the country and diesel between Rs 80 and Rs 90 a litre.
Fuel prices remained static since November 4 because state-run fuel retailers, which control 90% of the market, have not revised the prices under informal government diktat driven by poll considerations.
Going by past instances, there is no escape from high fuel prices once state polls are over as tensions in West Asia and Ukraine are expected to keep the oil market on the boil.

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