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'I accept current fuel prices are problematic,' Dharmendra Pradhan

Centre's excise duty today accounts for Rs 32.90 or nearly 35 per cent with state government's VAT accounting for another Rs 21.81 or another 23 per cent of the retail price of every litre of petrol in Delhi

In past six weeks, fuel prices have seen up to Rs 6.25 per litre hike In past six weeks, fuel prices have seen up to Rs 6.25 per litre hike

Union petroleum minister Dharmendra Pradhan has accepted that current fuel prices are at "problematic" levels in India. "I accept that current fuel prices are problematic for people but be it the central or state government, over Rs 35,000 crores have been spent on vaccines in a year. In such dire times, we're saving money to spend on welfare schemes," Pradhan told the media.

Petrol and diesel that are not part of GST attract excise duties from the Centre and VAT from states that make them one of the highest-taxed commodities in the country. In the last few years, these taxes have been raised on several occasions making the fuels one of the highest taxed in the world. Between FY15 and FY20, for example, excise duties were raised a record 12 times and lowered only twice.

Also read: Fuel prices hiked for 25th time since May 4; petrol costs Rs 102.58 in Mumbai

In the past six weeks, fuel prices have seen up to Rs 6.25 per litre hike. Petrol prices have now broken the psychological Rs 100 per litre mark in as many as 135 districts in the country, including all the cities in states like Rajasthan, Maharashtra and Madhya Pradesh.

The central government's excise duty today accounts for Rs 32.90 or nearly 35 per cent with the state government's VAT accounting for another Rs 21.81 or another 23 per cent of the retail price of every litre of petrol in Delhi. Similarly, in diesel, excise duty accounts for Rs 31.80 or over 37 per cent and VAT Rs 12.50 or 14.6 per cent of every litre in Delhi. In all, taxes make up 58 per cent of petrol and 52 per cent of diesel prices in Delhi today.   

This has bolstered the government's fiscal report card, which has otherwise been undermined by low economic activity. Excise duty revenues jumped over 35 per cent to Rs 3,61,000 crore in 2020/21, against the budgeted estimate of Rs 2,67,000 crore. Part of this was collected through cess under the Central Road and Infrastructure Fund (CRIF), which the Centre does not need to share with states.

Meanwhile, Pradhan said various welfare schemes are being run to provide relief to people amid the second coronavirus wave, which has hit India badly. He said PM Narendra Modi recently approved Rs 1 lakh crore under the Pradhan Mantri Garib Kalyan Yojana scheme. The scheme offers free food grains to the poor and it'll go on till Diwali this year. He said farmers are also immensely benefitting from the PM-Kisan scheme, as the money is directly reaching the poor farmers.

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