The petro crude price touched the record high of 70 dollar per barrel after the list price rise in November 2014. It being a transport fuel is going to affect Indian economy and price rise of all the commodities.
About three years backs there were record decline in crude price upto 40 dollar per barrel on such occasions the central and all state governments enhanced its Excise and VAT taxes to that proportion to maintain tax revenue on the same level.
The Government took such action the next day quickly. But when price of petro crude rise the Government tax earning automatically increase. But on such occasion the Government never quickly reduced it tax slabs to maintain the price of petrol and diesel for the general public.
Fluctuation in crude prices should be stabilized at the same point with the upper and lower level or taxation. It should be brought under the GST to have same rate to work out one rate of transportation throughout the country.
The Government should also ensure and enforce fixed Excise and VAT Taxes otherwise the object of GST to have one rate and one market of the nation can never be achieving. The GST is meaningless unless petrol and diesel are not brought under its orbit.
Two reasons are cited for spurt in petrol prices. The political turmoil in Venezuela has affected the crude production and apprehension that America is going to impose sanctions on Iranian crude trade. Iran is the biggest crude oil producer and main supplier to India. The hike on petro diesel prices will increase price rise and reduce the growth rate of the country.
In the month of March on the basis of retail price the price rise was 4.28 per cent. The Reserve Bank of India has calculated that in 2018-19 the price rise up by five per cent and it will not be possible to reduce the bank lending rate also.
The RBI always take the plea of price rise in not reducing the bank rates. The rupee has depreciated further and fell below 67 per dollar mark.