Why Is Petrol Cheaper in Pakistan Than in India?

Why Is Petrol Cheaper in Pakistan Than in India?
Why Is Petrol Cheaper in Pakistan Than in India?

Petrol bills shoot up in India every time international crude oil prices go up. But shouldn’t they come down when the crude oil prices come down?

Prices of crude oil have dropped 38% in the last year but petrol prices have come down by just 7%. Simply put, according to the Congress party, the BJP government has been cruel to the middle-class.

The BJP, which was elected to office because of strong support from the middle-class, seems determined to hit the middle-class as it has hiked the Central Excise on Petrol by a massive 84% since it took office and you are now paying Rs 8 per liter as Excise, Congress cautions the consumers.

The opposition party says this has created a situation where Indians are paying about 27% higher than the price in Pakistan.

According to Congress, the Narendra Modi Government took office when the price of crude was around $105 per barrel, which hit a historic low around January 2015 as the price of the Indian crude basket (the rate at which Indian oil importers buy crude oil) reached around $45 per barrel.

Though the price of petrol has been decontrolled, the government only marginally reduced retail petrol prices during the period, according to Congress.

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Crude oil prices have now settled close to $60 per barrel and it has continued to be in that range, which is around 38% lower than when the Modi-led NDA took office.

Why Is Petrol Cheaper in Pakistan Than in India?
Why Is Petrol Cheaper in Pakistan Than in India?

The Modi government should have passed on the benefit to the middle-class Indians. That didn’t happen, and it has resulted in high prices of essential commodities. What happened here indicates that the government perhaps got too greedy and wanted to fill its coffers and meet its fiscal deficit targets, Congress argues.

Lower international crude oil prices have meant that the price charged to dealers has come down from Rs. 48 per liter to Rs. 36 per liter but no benefit has been passed on to the middle-class.

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Also, the Excise Duty on Petrol has been hiked from Rs 9.48 per liter to Rs 17.46 per liter and this jump of Rs 8 per liter is the reason why the benefit of the global price crash is not reaching the average middle-class Indian.

Why Is Petrol Cheaper in Pakistan Than in India?
Why Is Petrol Cheaper in Pakistan Than in India?

The government’s net savings from the increase in Excise duty on Petrol is leading to big earnings for the BJP government but the money is not being spent on big infrastructure projects or the welfare of the poor.

The NDA Government had dramatically cut the funding of various social welfare schemes started by the UPA and it seems unlikely that spending on these schemes would be revived, now that the government has more money, Congress said.

The biggest loser, however, is the middle-class that would have expected a little relief from inflation. The Prime Minister had himself stated in his Delhi rally that people were saving a few extra thousands from their monthly fuel bills but this comfort is gone as Petrol prices have gone up by 13% since January 2015, Congress said in a statement issued Saturday.

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Rakesh Raman