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Who Bears the Burden of Rising Prices of Petroleum Products Due to Taxes in India?

Vol. 58, Issue No. 16, 22 Apr, 2023
Rajesh H Acharya, Anver C Sadath

The hike in the prices of petroleum products in India post 2014, primarily due to higher petroleum taxes, is examined. Household consumption expenditure data collected from the India Human Development Survey (2011–12) is analysed using the input–output framework to understand both the direct and indirect effects of rising prices of petroleum products. Results indicate that petroleum taxes are highly regressive, especially at the bottom two consumption expenditure deciles, as raising prices of petroleum products increases the overall cost of living. Results also reveal that households in the middle- and upper-income groups have the similar burden of rising petroleum prices, indicating that tax is not progressive.

Taxing Petroleum Products

Vol. 56, Issue No. 9, 27 Feb, 2021
D K Srivastava, Muralikrishna Bharadwaj, Tarrung Kapur, Ragini Trehan

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.

Inflation with Disinflation?

Vol. 51, Issue No. 18, 30 Apr, 2016
Tulsi Lingareddy

Price inflation in India as measured by the Wholesale Price Index and the Consumer Price Index has shown diverging trends. While WPI indicates a disinfl ationary situation for 16 months, CPI indicates inflation. Explaining the construction of the two indices, the trends of subgroups of both indices are presented. It is found that the different sample sizes and weightages of commodity groups of both indices and price interventions in the market explains, at least in part, this odd situation of infl ation along with disinfl ation.

Petroleum : Decontrol Muddle

Vol. 37, Issue No. 15, 13 Apr, 2002

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Oil Sector Deregulation

Vol. 36, Issue No. 34, 25 Aug, 2001

Will the government postpone the dismantling of the administered pricing mechanism (APM) for petroleum products beyond the current schedule of April 1, 2002? Given the mounting oil pool deficit and the professed disinclination of the finance ministry to take the pool account deficit on to the budget, such a possibility cannot be ruled out. It would be an unfortunate development, however, and wholly avoidable. The government must take a firm stand on sticking to the current timetable for freeing up petroleum product prices. Further, decontrol must go beyond prices and extend to removing the stifling restrictions currently proposed for entry into the business of marketing oil products.

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