Petrol price hike

Petrol Price Hike In India
Petrol price hike

If you read complete article then you will get all about petrol and diesel price mechanism. 

In many areas of Rajasthan and Madhya Pradesh the price of petrol has accident inr 100 per litre. In many other cities it is near the range of inr 90/ litre . 

Which factors decide petrol prices

1 . In today's time the government in our country uses the dynamic pricing system to decide the price of petrol and diesel .
2 . The way crude oil prices fluctuate in the global market similarly petrol price rises fluctuate in country .

So ,you can say it is deregulated that it is to say the government is not directly controlling the price of petrol. Rather the global market is controlling what should be the price of petrol. 

By hearing this a lot of questions will come up in your mind I will answer those question letter. 
But historically it wasn't always so. 
Before 2010 the government reserve right to decide petrol prices so government have pressure to keep petrol prices down by various organisations but in 2010 Manmohan Singh government make an amendment and decided to leave petrol prices change on global market and in 2014 Modi government also make diesel prices dependent on global market .
Till 2017 the government should give a price for 15 days period and after 15 days according to global market new rate of petrol is announced. 
but by this people get known before 15 days that if is petrol price is going to increase or decrease so they by control in stock before 15 days. 
so in 2017 government decided that petrol prices are a variable that change it every day in every morning at 6 a.m. according to global market .
Many changes happened, first was that whatever small change happens in the global crude oil will impact the consumers and dealers be its profit or loss. 

So this is the story today,like you already know crude oil is the raw material for both petrol and diesel. In India about 84% petroleum products are imported. 

Global crude oil price has been going up since the last few weeks .Due to this reason prices in India are going up .
You might ask me one question here if the petrol price depend on the price of crude oil then when crude oil prices slipped into negative, why didn't the price of petrol fall down for us?

If you ask me this then it is quite a good question,
because in reality the government keeps saying again and again that all of its is regulated And everything depends on global crude oil prices .
But in reality, the government controls these prices through taxation. 
when prices slip into negative for crude oil then the government increase its taxes.

 Recently the government has increased the central excise duty by INR 13 per litre and INR 16 for litre on petrol and diesel respectively .

Many states have also increased the VAT (value added tax) on them. So this is a type of one sided regulation by government. 
When crude oil prices go up then for you petrol prices go up and you pay more . But when crude oil prices come down the government increased the taxation and you have to pay more again .

Foreign example ,we consider the  price of petrol in Delhi, on February 16th you're paying INR 89.29/litre now out of this the best price is inr 31/ litre approximately. 
The central government text I excise duty  is even higher than the base price at INR 32/litre .

The taxes by State government VAT stands at around INR 20/litre. 
after this if you include freight charges and dealer commission the price would reach around INR  89.29/litre. 
Delhi respectively still have a lower price if you compare other cities .in many areas of many cities this price have crossed the INR 100 liter because state governments are charging more in taxes .

If you want to understand their break down then you can look at table on home page  and know how much tax is charged in which state and how it is calculated. 

If you compare from before most state governments have not increased the text that much. They have increased around 5 to 10 per litre. 

But the biggest fault is of the central government who have increased their texts by INR 13 to 15 per litre within a year .

In the beginning of 2020 the central government excise duty was just INR 20 per litre. In today's time it is about to touch INR 33 litre .
that is to say the central government have increased text by INR 13 per litre on petrol within a year . and if you compare this number from 2014 then this text cause to be INR 10-11 /litre in 2014.
When the Modi government came to power with his promise that they would and the exploitation in the name of petrol diesel prices .
seven years after coming to power they have increased the tax on petrol and diesel three times .
it means the petrol and diesel price  exchange are increased by 3 times. 

More taxes than 3 times .

From INR 11 per litre it is about to touch INR 33 per litre .
what is surprising is that a Modi even today even after remaining in power for 7 years blames Congress petrol price goes up.

They says that petrol price rising in congress fault and you are paying so much for petrol. 
If you compare the price of petrol with the rest of the world then you will get to know how expensive they are in India. 
but it is not even the case that India is the place where petrol it most expensive .there are many other countries where petrol is must dearer than at Japan where  is at INR 94 per litre .
there are many other countries where petrol is must wear such as Japan where it is inr 94 per litre. 
South Korea INR 96 per litre Germany INR 119 per litre France INR 126 per litre and Hong Kong where it is most expensive it is inr 173 per litre .
But remember one thing friends that in all these developed countries the salary of people is much more as well 
In Germany on an average an individual as INR 223 lakh per month end in India a common individual and INR 20-30k per month. 

In Germany people have an average income 10 times of India so people have that kind of purchasing power as well. 
but you are there only going a little bit more  around 10% for petrol. 
So if you look at this through this logic then in India people are paying 10 times more as per their income. 

One question still remains to be answered why crude oil prices going up since the last few months?

The answer to this question is quite simple basic economics says that whenever the demand for something goes up for the supply of it falls then its price will go up .
When the demand falls and supply increases then its price will go down. 

The same thing is happening with crude oil when the lockdown was imposed in entire world due to covid-19 the demand for oil went down because aeroplanes were not flying,and vehicles are not plying on the roads because the demand fell down and supply remained the same before the price lived into negative .
now as more people are getting vaccinated and lockdown is eating out the economy is coming back on track the demand is going up. 
This is the reason price of crude oil is going up. 

Many oil producing countries have a group as well known as opaque which also control things from the supply side as well. 
I have explained the entire mechanism in this blog. 
you can understand in detail you can find the link on our homepage .

In many areas of Rajasthan and Madhya Pradesh the price of petrol has accident inr 100 per litre. In many other cities it is near the range of inr 90/ litre .

But you need not panic ,this is not bad news, in fact it is good news

Because acche din a gaye hainπŸ˜‚πŸ˜‚. if this would have happened before 2014 then it could have called it a bad news. Then you could have said that it's put a lot of pressure on common man ,Prices have increased a lot' . But after 2014 this is deemed as a nationalist decision .rising petrol price means that more of your money is going to the government and you are building the nationπŸ˜‚πŸ˜‚πŸ˜‚ .

That's is to say that more of your money will be used to build the nationπŸ˜‚.

widen your chest and say it with pride that I am buying INR hundred per litre petrol for the sake of nation building. 


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