Why the Fuel price Hike?
The sudden increase in fuel price in India , is due to two reasons .
- Cut down in fuel production.
- Unwillingness of Indian government to lower taxes.
Saudi Arabia pledged a voluntarily output cut of 1 million barrels per day under a deal between Organization of the Petroleum Exporting Countries (OPEC) and its allies OPEC+ . This is done to bridge the supply and demand imbalance in market and to earn more profit .The cuts started from Feb1 and is expected till next month .Due to this cut in production , the crude oil is at $63.3 per barrel .
Meanwhile ,last year there was no demand due to complete lockdown around the world and the crude oil prices touched the bottom .Even though crude oil was getting at a lower price ,Indian government increased the central and state tax for fuels . The tax hike was done to generate more revenue and use it for covid-19 and other development projects .
As the price of crude oil is increasing , the Indian government is still unwilling to reduce the tax and justifying that the taxes cannot be levied ,which means we will be paying a lot for tax than the base price of the fuel .
What is the good thing in fuel price hike :
Yes, every problem has a little good effect too. The rise in fuel prices will force people to think and use public transport and electric vehicles ,thereby reducing the pollution and helping the environment to repair itself .
