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Friday, January 27, 2023

India Cuts Fuel Taxes as Prices Reach Record Highs

After the rising cost of crude oil pushed fuel prices to all-time highs, India has reduced consumer levies on gasoline and diesel.

The decision is intended to reduce price increases and “further boost the broader economic cycle,” according to the administration.

As economies throughout the world recover from the epidemic, global commodity prices have skyrocketed this year.

However, as countries aim to reduce their reliance on fossil fuels, the move is projected to increase demand for gasoline.

The excise duty on petrol in India has been decreased by 5 rupees (£0.049; $0.0671) per litre, and the levy on diesel has been reduced by 10 rupees.

“The cut in excise duty on gasoline and diesel will promote consumption and keep inflation low, benefiting the poor and middle classes,” the administration stated in a statement.

Following the announcement by the federal government, at least 10 states governed by Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) or its allies stated they would lower local gasoline taxes by up to 7 rupees per litre.

The announcements were made on the night of Diwali, which marks the beginning of India’s busiest festive season, which is often accompanied by increased consumer spending.

Manufacturers and farmers, whose overheads have been driven up by growing fuel costs, are set to benefit from the tax decrease.

Global oil prices have risen this year, putting a strain on India, which imports around 85 percent of the oil it uses. This has aided in the rise of gasoline and diesel prices to new highs.

One of the main requests of the country’s farmers, who have staged a series of large protests for more than a year, is for fuel prices to be reduced.

The reduction in diesel tax “will come as a boost to the farmers during the approaching Rabi season,” according to the government statement.

Rabi crops including wheat, barley, and mustard are usually planted after the monsoon season ends in mid-November.

However, even as world leaders, including Mr Modi, assemble for the COP26 climate change summit to address the global economy’s dependency on fossil fuels, the tax cuts are projected to encourage use of petrol and diesel.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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