As per Feb 2021 report in India Today: 7 years ago, crude oil was 2/3 of retail price and 1/3 of tax. Today, 2/3 is tax and 1/3 is crude oil. Look at this chart... So if you bought petrol worth 100 Rs in May 2014, you'd actually have fuel worth 63 and remaining 34 Rs in taxes. Manmohan Singh was criticized harshly.
But in Feb 2021, 100 Rs petrol actually had fuel only worth 36 Rs and rest 64 Rs in taxes (which are rising day by day) What is this called... a masterstroke? The question is, are state governments taking bulk of the tax? Because according to whatsapp university, centre wants to lower price but states don't allow. This was debunked in Aug 2021 report by Deccan Herald. Delhi price as an example... On 1 July 2021: So out of 100 Rs petrol, 33 went to centre and 23 Rs to state government (56 total tax out of 100 rs). Whereas GST is already going to centre, which is then distributed among states. But since there is not enough money so states have to plead centre for funds. In this case, petrol tax is important for state government. There is nothing much you can do about it. Apart from 100 crore doses, we have made yet another historic achievement. In May 2020, India charged the most tax on petrol in the world. Look at this chart and you will know the contribution of common man towards nation building. A lot of hype for vaccination milestone then why not for taxation milestone? What is the government collection? March 2021 report shows, Dharmendra Pradhan (petroleum minister then) wrote: 459% increase in tax collection on petrol-diesel in 7 years. In 2013, it was 52000 crores. In 2019-20, it was 2.13 lakh crores. That's Vikas! What is the reason for charging high tax? Finance Min Nirmala Sitharaman blamed Congress. In aug 2021 she said: UPA oil bonds are responsible. What is oil bond? It is a debt instrument (cash subsidy) granted to oil marketing companies like BPCL, IOC, HP. Before deregulation, in international market, crude price was high and in domestic market, price was subsidized.
So to reduce burden UPA govt issued oil bonds worth 1.4 lakh crore. To encash in future. In 2014, 1.3 lakh crore oil bonds remaining to NDA. Fall in crude price followed, but tax on fuel was further increased by govt. In 2020-2021 alone, 3.34 lakh crore collected by petrol-diesel excise duties. Meaning, 1.3 lakh crores to give as oil bonds, but 3.34 lakh crores already collected... three times the money. Congress is saying that in 7 years BJP govt has collected 17 lakh crore tax on petrol-diesel. Oil bond is just 10% of that. But it is good tactic to confuse common people because they don't know what oil bond is. They understand that congress is to be blamed. The second reason to increase excise duty is said to be free vaccination.
Interesting fact: April 2021, Covishield vaccine price for centre was 150 rs per shot. In July it was risen to 215 rs- covishield and 225- covaxin. States buy at 300 rupees. That is different story. Two shots for centre is for 450 rupees. In 2020-2021 3.34 lakh crore was collected by centre. Divide by 450, it is enough to cover vaccination of entire world. So why extra costs? Centre's own estimates show that the free vax scheme will cost around 45000-50000 crore. Then what about excess collection? Why government dependent only on excise duties? That is why fuel tax is not under GST slabs. (To maintain current revenue collection) We noticed the greatest fall of GDP during the pandemic. To push the economy after pandemic, government turned to fuel price.
But because fuel price impact wholesale price so 11.39% spike in August WPI. Middle class is anyway ignorant to all this. High fuel price is affecting economic recovery. RBI and several economists have advised government to reduce fuel price. But action needs to take place. After demonetization and GST enter covid pandemic (black money not retrieved as well). So there is less money. Only middle class is ever ready to sacrifice, so why not. Today, international crude rate is 40% less than 2013 rate. But as economies open up, this crude price can increase further and then petrol can touch 200 rs here. Some will still happily pay more for petrol and defend it. Till that time why will government stop increasing price?