New Delhi: Petrol and diesel prices are at all-time high across the country. In the wake of the same, India Inc has demanded the Government to cut down the excise duty on petrol and diesel so that the prices can be controlled. The industry bodies said that rising oil prices pose a high risk to India’s economic growth trajectory.
Two major industry bodies, FICCI and ASSOCHAM have also urged the Government to put the petrol and diesel under the ambit of GST as this will prove to be the long-term solution for soaring prices.
Rashesh Shah, President, FICCI said, “Over the last few years, falling oil prices contributed significantly towards improving the health of the economy. With global oil prices once again spiralling upwards, the macro-economic risks of higher inflation, higher trade deficit and pressure on balance of payments with attended consequences for the Rupee value have once again surfaced.”
“Weakening Rupee will further add pressure on the import bill. There is also a risk that monetary policy may turn hawkish, which would in turn have a bearing on growth of private investments,” Shah further added.
He also said that unless swift action is taken to address the situation, the economic growth will again head towards a speed-breaker. Amongst the most immediate actions that can be taken by the government is to bring down the excise duty on fuel.
Echoing the views of Shah, D.S. Rawat, General Secretary, ASSOCHAM said, “While cut in excise duty on petrol and diesel may provide temporary relief to consumers, the sustainable solution lies in the automobile fuel coming under Goods and Services Tax, which can happen only after the Centre and states together reduce their dependence on the fuel considerably.”
Adding to his comment, he said that the rising crude prices coupled with weaker rupee with cascading impact on inflation pose a big challenge for the Indian macro picture and ironically, there is little that can be done in the short term.
He further added that in the long run, India needs to rework its energy security and ensure that petrol and diesel do not remain a huge revenue resource. Rather than being a revenue source for the government, the auto fuel should drive the economic growth.
When Subhash Chandra Garg, Secretary, Economic Affairs was asked whether the Government is looking forward to cut down the excise duty on petrol and diesel he only said, ‘Just watch’. Though he said that the spurt in oil prices will push up the oil import by USD 25 billion to USD 50 billion under the different scenarios, adding that USD 72 billion were spent by India on oil imports last year.
Notably, the Government increased the excise duty on fuel nine times between November 2014 and January 2016 when the global oil prices were down, whereas it has reduced it only once in October last year.