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The Government has asked oil retailers in the States of India have been asked not to increase the retail price of petrol and diesel fuel. This is aimed to absorb a portion of the loss that occurred due to the recent crude oil recovery.
Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation are bound to bear a loss of around Re 1 per litre on petrol and diesel retail. In addition to this, Indian Oil shares have fallen by 7.6 percent on Tuesday, the 10th. This figure is the biggest fall since November 2016. On the other hand, HPCL has gone down by 8.3 percent in shares.
The government is aiming to keep oil prices under check, in order to gain an upper hand in the upcoming state elections. India imports over 80 percent of the yearly fuel or crude oil consumption. Oil Minister, Dharmendra Pradhan shared that, to manage finances better, crude oil prices should be around 50 dollars (Rs 3270) a barrel.
The people, on the contrary, shared that an excise duty cut on rising fuel prices is unlikely due to the inefficient implementation of Goods and Services Tax (GST), and revenue collection. The Ministry of Oil has also been asked to make subsidies at certain price points of petrol and diesel, keeping the elections in mind.
Meanwhile, HPCL chairman, M. K Surana told that the company is not aware of such an advice from the government about the absorption of losses. He was speaking at the International Energy Forum held in New Delhi.
Oil prices had previously hit a low of $27.1 per barrel in 2016. Now it is $70 per barrel.
Thoughts On The Government Asking Oil Retailers To Reduce Fuel Prices
Fuel prices in India are ridiculously high. Even diesel, which was always thought to be cheaper than petrol, almost became par with petrol, recently. Though it is the retailer from whom we purchase fuel, it the government which absorb the maximum profit. A lot of experts believe that the current government is charging a more than necessary for a given unit of fuel. Hence, it is not fair to ask the retailers to reduce the prices rather than the government cutting excise duties.
What do you think? Should the government cut taxes or the retailers reduce their profit?