Even after deregulation of pricing, the movement of retail prices of petrol and diesel is not directly related to global crude oil prices. Taxes make up around two thirds of the petrol and diesel prices paid by consumers.
With the lowering of global crude prices in recent months, the expectation was that this would benefi t the users of petroleum products, especially in the industry and transport sectors, and the consumers. This expectation has so far been belied. The central government has not only increased the taxes under its control but also focused on increasing relatively more, the non-shareable portion of excise duty, thereby constraining the fi scal space for the state governments. The continued high retail prices have implications for infl ation as well as potential growth. This situation needs to be carefully monitored.
