There Is a Way to Cut Petrol, Diesel Prices But the Modi Government Isn't Interested

Prasenjit Bose thewire.in , Vartha Bharati | 12-09-2018 | 17:46:00 IST

An employee of Bharat Petroleum waits for customers in Mumbai. Credit: Danish Siddiqui/Reuters

The prices of petrol and diesel have reached unprecedented levels, leading to massive discontent and protests organised by the opposition. Petrol in Delhi has crossed Rs 80 per litre and diesel Rs 72 per litre. In most other cities, the prices have reached higher levels, depending on the rates of VAT imposed by state governments.

Spokespersons of the Narendra Modi government are pleading helplessness over the situation, citing the hardening of global crude oil prices and the devaluation of the rupee. This is a lame excuse. The current prices of petrol and diesel in India’s neighbouring countries Asia are much lower, as can be seen from Table 1.

Table1: Retail price of petrol and diesel (1 litre) in India and neighbouring countries (in Indian rupee) on September 1, 2018

Source: Petroleum Planning & Analysis Cell (PPAC), Ministry of Petroleum & Natural Gas

Why are the retail prices of petrol and diesel higher in India? It is because of the high incidence of Central excise and state VAT imposed on these commodities. For every litre of petrol, the Central government currently collects an excise duty of Rs 19.48; for diesel the excise duty is Rs 15.33 per litre. The state governments impose VAT over and above this. The rate of indirect taxes (central excise and VAT taken together) have crossed 100% in the case of petrol and 70% in the case of diesel. Without taxes, the retail price of a litre of petrol and diesel should have been around Rs. 40, even at the current level of international crude oil prices.

Table 2: Tax Revenues of the Union government

Source: Receipts Budget, 2018-19; CAG Report Nos. 42 of 2017, Department of Revenue (Indirect Taxes – Central Excise) & CAG Report No. 17 of 2013, Department of Revenue (Compliance Audit on Indirect Taxes-Central Excise and Service)

*Note: Data on excise duties on petro-products for 2017-18 is provisional and has been sourced from PPAC Ready Reckoner, June 2018, Ministry of Petroleum & Natural Gas    

Table 2 provides the annual estimates of gross tax revenues of the union government under the UPA-II and the Modi regime along with the break-up of major tax-heads, namely excise duties on petro-products, corporate tax and income tax. Table 3 provides the share of these three major tax heads in gross tax revenue, calculated from Table 2.

It can be seen clearly from Table 3 that the reliance of the Union government on excise collections from petro-products have gone up considerably under the NDA. In the five years from 2009-10 to 2013-14, the share of excise collections from petro-products in gross tax revenues (GTR) averaged around 8.8%. From 2014-15 to 2017-18, the average went up to 12.5%. Simultaneously, the share of corporate tax collections in GTR fell from an average of 36.5% under UPA-II to 30.7%. The average share of income tax collections in GTR have increased from 19% under UPA-II to 21%.

Table 3: Share of Major Taxes in Gross Tax Revenues (GTR) of the Union government

Source: Same as Table 2

This exposes the class bias in the NDA’s revenue mobilisation strategy. While the tax share of large corporations have come down substantially, the tax share of fuel consumers and income tax payers has risen. The corporate class has benefitted at the cost of the poor and the middle class. This socially iniquitous and unjust revenue mobilisation strategy needs to be abandoned forthwith.

Petrol and diesel need to be brought under GST, just like kerosene and LPG. Even if the highest GST rate of 28% is applied, petrol and diesel would not cost more than Rs 55 per litre. The resulting revenue losses can be compensated through higher mobilisation of corporate taxes and doing away with corporate tax exemptions. Revenue foregone on account of corporate tax incentives have totalled over Rs 85,000 crore per year in the last two financial years, as per the receipts budget 2018-19. The pro-corporate bias in the revenue mobilisation strategy needs to be corrected.

Prasenjit Bose is an economist and political activist.

Courtesy: thewire.in

Let the Truth be known. If you read VB and like VB, please be a VB Supporter and Help us deliver the Truth to one and all.

Nicobar Tribal Council Alleges FRA Violations in Great Nicobar Wildlife Sanctuaries

14-05-2026 ¦ 14-05-2026 IST

Representational image (Magnific)

Sri Vijaypuram (Port Blair): The Tribal Council of Little and Great Nicobar has alleged fresh violations of the Forest Rights Act in the notification of three wildlife sanctuaries linked to the Centre’s ₹92,000-crore Great Nicobar Island project, even as the Calcutta High Court is set to hear petitions challenging the mega project over similar concerns next month.

The Union government had, in October 2022, notified three wildlife sanctuaries in parts of Little Nicobar Island, Menchal Island and Meroe Island for the conservation of leatherback turtles, megapodes and coral ecosystems. The move came after the government acknowledged that the proposed infrastructure project on Great Nicobar Island would affect coral colonies and nesting habitats of endangered species.
However, the tribal council has maintained that the sanctuaries were declared without consultation with the Nicobarese communities who traditionally inhabit and manage these islands.

In a letter dated April 23 addressed to the Assistant Conservator of Forests of the Nicobar Forest Division, the council reiterated its opposition to the sanctuaries and objected to the formation of a committee to determine eco-sensitive zones around the protected areas.

The council said its chairman had not been consulted before being included in the committee and was informed of his membership only a month after the committee was constituted.
The three notified sanctuaries include the Leatherback Turtle Sanctuary in parts of Little Nicobar Island, the Megapode Sanctuary covering the entire Menchal Island and the Coral Sanctuary spanning the whole of Meroe Island.

According to the council, Menchal and Meroe islands hold deep cultural and spiritual significance for the Nicobarese community, which believes the islands are inhabited by the spirits of their ancestors.

The council demanded that the sanctuary notifications be revoked and the eco-sensitive zone committee dissolved, alleging that both decisions were taken against the wishes of the indigenous community.

Meanwhile, Jairam Ramesh has written to Tribal Affairs Minister Jual Oram alleging violations of the Forest Rights Act in the process of obtaining consent for diversion of forest land for the Great Nicobar project.

Ramesh argued that consent should have been obtained through the Tribal Council representing the Nicobarese communities instead of through Gram Sabhas representing settler families. He also questioned how the government-controlled Andaman Adim Janjati Vikas Samiti could provide consent on behalf of the Shompen community, classified as a Particularly Vulnerable Tribal Group.

He urged the Tribal Affairs Ministry to intervene and seek withdrawal of clearances granted for the project under the Forest Rights Act.
Earlier, Ramesh had also written to Union Environment Minister Bhupender Yadav alleging that environmental impact studies for the project were conducted in haste and without the detailed seasonal assessments mandated under environmental laws.

The dispute dates back to 2022 when the Andaman and Nicobar administration initiated the process for notifying the three sanctuaries before holding Special Gram Sabhas for diversion of forest land linked to the Great Nicobar project.

In May that year, the administration invited objections and claims regarding the proposed sanctuaries. Subsequently, on July 19, the Nicobar Deputy Commissioner certified that no objections or claims had been received.

The tribal council later wrote to the district administration stating that the notification process was carried out without ensuring that residents of Little Nicobar Island were informed as required by law. It alleged that no public announcements seeking objections were made in villages such as Bahua, Muhincoihn and Kiyang, whose residents traditionally use and manage parts of the notified areas.
The council said the Nicobarese community had protected the islands and wildlife for generations through customary practices and traditional belief systems.

It further argued that the sanctuaries would interfere with long-standing rights over forests and coastal areas. They noted that these areas are used for rituals, plantations, collection of forest produce, construction of huts and canoes, harvesting medicinal plants and worship.

In November 2024, the council objected to draft Island Coastal Regulation Zone plans, demanding basic infrastructure, instead of proposed eco-tourism activities in the sanctuaries. The council demanded better public restrooms, jetties, water facilities, pathways, and mobile connectivity.

The Nicobar administration issued a clarification in May 2025, stating that the sanctuaries would not affect hunting rights available to Scheduled Tribes in the Nicobar Islands. The council, however, rejected the clarification, stating that their dependence on forests and coasts extended far beyond hunting activities.

Earlier this month, a Bench led by the Chief Justice of the Calcutta High Court dismissed preliminary objections raised by the Union government against petitions challenging the diversion of forest land for the Great Nicobar project. The matter has now been listed for final hearing in June.