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Petrol, Diesel Prices Can be Cut, But Lack of ‘Political Will’ Keeping Prices in India Highest in World: SBI Economists
Shimla-Petrol and Diesel prices in India could be brought under control and their price could be reduced to Rs. 75 and Rs. 68, respectively, says the SBI’s Ecowrap report released by its Economic Research Department. The Indian Government can do this simply by brining these fuels under the ambit of the Goods and Services Tax (GST), the report said.
However, according to the report, lack of political will is keeping Indian oil product prices at one of the highest in the world. This lack of will arises from the fact that Centre and States are loathe to bring crude oil products under the GST regime as Sales Tax/VAT on petroleum products is a major source of own tax revenue for them. The states, in particular, would face a loss in revenue.
However contrary to this possibility, the government had been maintaining that it doesn’t control fuel prices. On February 17, 2021, on a day when petrol crossed the ₹100 mark, Prime Minister Narendra Modi had blamed it all on the previous governments.
The report said that one of the unfinished agendas of the current GST regime is bringing petrol and diesel under GST.
Every state has its own tax structure. The states choose to levy a combination of ad valorem tax, cess, extra VAT/Surcharge based on their needs. These taxes are imposed after taking into account the crude price, the transportation charge, the dealer commission and the flat excise duty imposed by the centre. The multiple taxes have made petroleum products prices one of the highest in the world, the report said.
The base price of Rs 75 for petrol and Rs 68 for diesel has been calculated on the following assumptions: Crude price at $60/bbl, exchange rate of Rs 73 for a dollar, transportation charges of Rs 7.25 for diesel and Rs 3.82 for petrol, dealer commission of Rs 2.53 for diesel and Rs 3.67 for petrol, cess of Rs 30 for petrol and Rs 20 for diesel, GST rate at 28 per cent and petrol consumption growth rate of 10% y-o-y and 15% for diesel y-o-y.
Using all these assumptions, the researchers have found that the base price for petrol and diesel comes out to be Rs 75 and Rs. 68, respectively at pan India level. At this base price, with multiple simulations Centre and States have a revenue deviation from budget estimates by only Rs. 1 lakh crore 90.4% of the GDP) after adjusting for the increase in consumption with the intended price cut.
The report further said that a dollar increase in the crude oil prices will push up the petrol price by around 50 paisa and diesel prices by around 150 paisa and bring down the overall deviation by around Rs. 1500 crore under the suggested baseline scenario.
If this tax structure is used for the Financial year 2022, when Centre and states taxes are already so high, we see that states which have the highest rates are losing revenue if they shift to this GST regime. But this flat taxation structure brings in uniformity and as per the calculations, it brings down the burden of taxes on the common man by almost Rs. 10-30 depending on the product consumed and the state in which it is consumed, the report said.
Additionally, it benefits some states which do not drastically tax their petroleum products, like Uttar Pradesh.
“Interestingly, our simulation exercise suggests that when crude oil/bbl declines by 10 dollars, Centre and states could save close to Rs 18,000 cres, if they keep the petrol prices at baseline Rs 75 and diesel at Rs 68 and don’t pass on the benefit to consumers,” the report said.
Further, the report recommended that the Government should build up an oil price stabilization fund which can be used in bad times for compensating revenue loss by cross subsiding fund saved from good times, without hurting the consumer.
Further, since November 2020, the prices of non-subsidized cylinders have increased from Rs. 594 to Rs 819 in Delhi, a substantial increase of Rs. 255 er cylinder. The data on DBTL (Direct Benefit Transfer for LPG) indicate that the subsidy amount has sharply plunged to merely Rs. 3,363 crores in April-December 20220 period from Rs 22, 635 in Financial Year 2020. There is negligible or no difference between subsidized and non-subsized cylinder.
The report also said that though the government has announced to give one crore more free connections to the needy over the next two years, affordability barriers still exist. The government should focus on the affordability issue and to achieve this, the SBI researchers have suggested a set of measures.
Separately, for the LPG cylinders, the report proposed an increased and graded subsidy to provide to poor consumers which can be tapered off over a period of, say, five years. For this, the Government can create a comprehensive merged database using database of Ayushman Bharat, PM-KISAN, PMJDY, PMUY and MUDRA and then provide these people with maximum four free cylinders in a year. Even if five crore people are eligible for this then the total cost to exchequer per year will be maximum Rs 16,000 crore.
Besides, the report suggested that the Government might cancel its borrowing planed in the last two weeks of March 2021, totaling Rs. 49,000 crores.
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HP Cabinet Decisions: Eligibility Criteria for BPL List, Special Task Force to Combat Drug Abuse & Other Decisions
Shimla-The Himachal Pradesh Cabinet, in its meeting held on Thursday, approved the inclusion of the following families in the BPL list:
- Families with no adult members between the ages of 18 and 59.
- Women-headed families.
- Families whose head has a disability of 50 per cent or more.
- Families that worked for at least 100 days under MNREGA in the previous financial year.
- Families whose earning members are suffering from chronic diseases such as cancer, Alzheimer’s, Parkinson’s, muscular dystrophy, thalassemia, or any other condition resulting in permanent disability.
The Cabinet also approved the establishment of a Special Task Force to combat drug abuse and dismantle drug trafficking and organized crime networks in the state through a comprehensive and multi-faceted approach.
Additionally, the Cabinet decided to promulgate an ordinance to amend Schedule 1A of the Indian Stamp Act of 1899. This amendment will facilitate the levy of a uniform stamp duty rate of 12 per cent on transfer and lease transactions secured under Section 118(2)(H) of the Himachal Pradesh Tenancy and Land Reforms Act, 1972, with prior approval from the State Government.
The Cabinet approved a ban on the felling of trees, except for Safeda, Poplar, Bamboo, and Khair (for sale), in accordance with a ten-year program.
The Cabinet reiterated its request to the Government of India to adopt a 90:10 funding formula for the power component of the Kishau Multipurpose Project, similar to the formula adopted for its water component. Alternatively, the Cabinet proposed providing a 50-year interest-free loan for the entire amount payable by the State Government for the power component under the Inter-State Agreement.
It approved the establishment of a 1 MW Green Hydrogen Project in Nalagarh, to be executed by HPPCL.
The Cabinet sanctioned the imposition of Green Energy Development Charges for Pumped Storage Projects. A charge of ₹2.5 lakh per MW per year will be levied for the first 10 years after the project’s commissioning, increasing to ₹5 lakh per MW per year thereafter.
Approval was given to introduce the Himachal Pradesh Sadbhawana Legacy Cases Resolution Scheme 2025 to resolve pending cases, litigations, and arrears under subsumed enactments such as VAT, CST, Entry Tax, etc.
The Cabinet decided to designate the area surrounding the Tara Devi Temple in Shimla district as a Green Area.
It approved the creation and filling of 10 Junior Office Assistant (IT) posts for the Himachal Pradesh Public Service Commission, Shimla.
The Cabinet selected the Centre for Development of Advanced Computing (C-DAC), under the Ministry of Electronics and Information Technology, Government of India, to conduct computer-based tests for the recruitment of Group-C posts through the Himachal Pradesh Rajya Chayan Aayog, Hamirpur.
Approval was granted for creating the Block Primary Education Office at Rohnat by bifurcating the existing Block Primary Education Office at Shilai in the Sirmaur district.
The Cabinet decided to transfer three-gram panchayats — Matyal, Kudal, and Dhadol — from Development Block Lambagaon to Development Block Baijnath in Kangra district to serve the residents of these areas better.
The Cabinet approved the Baddi-Barotiwala-Nalagarh Development Authority Land Pooling Policy-2025.
It also approved the establishment of the Himachal Pradesh State Water Informatics Centre to collect data from domain-specific bodies, develop new databases, and disseminate comprehensive water-related information.
Shimla– Himachal Pradesh Government has initiated action against Zila Parishad cadre employees, who have been on strike since September 30 over their demands for a merger with the Panchayati Raj Department. To start with, the Govt has terminated the services of 167 Junior Engineers (JEs) and ordered fresh recruitment of Diploma or Degree holders in Civil Engineering.
According to the Director, Panchayati Raj Department, Rugved Milind Thakur, notifications have been issued to the Chief Executive Officers of Zila Parishad and the Deputy Commissioners regarding the same.
Earlier, Chief Minister Sukhvinder Singh Sukhu, in a statement to the media, had said that at a time when the State was hit by a natural disaster and is in the middle of carrying out relief work and rehabilitation of the affected people was not an appropriate time for such strike. He further added that the demands of these Zila Parishad employees would be attended to when conditions are suitable. He had added that the employees wouldn’t get anywhere by using pressure tactics against the State Government.
The Panchayati Raj and Rural Development Minister Anirudh Singh had maintained the same argument and urged the employees to end the strike and get back to work because their absence was obstructing relief work. Anirudh Singh argued that the HP Government was serious about the demands of the employees, but their merger will have to go through various stages in accordance with the rules and legal procedure. This process would take time, he said. However, the Minister also failed to convince the striking employees to get back to work.
A few days back, a spokesperson of the HP Panchayati Raj Department had issued a statement, which said,
“Absence of technical staff was causing delayed wage payment to the MGNREGS workers as well as hampering development works being undertaken for disaster relief and restoration. A special package has been announced by the state government for the disaster-affected families. Under this package, reconstruction of houses and cowsheds and other relief and rehabilitation works, conservation activities of agriculture and horticulture land, etc. were to be done. But these works are being affected due to the absence of technical staff.”
The Department had also sought details from all the Chief Executive Officers of the Zila Parishads regarding the absence of employees in view of the delay in developmental and disaster relief works by October 18, 2023. The government termed their absence as unauthorized.
The Department said that it was taking all necessary steps to deal with the situation arising due to the absence of certain categories of employees.
“There should not be any unnecessary delay in disaster relief and rehabilitation works and the Panchayati Raj Department was determined to ensure all assistance and other benefits to the affected families on time,” the Spokesperson said in a statement.
The Department had also handed over the charge of Panchayat Secretaries temporarily to Gram Rozgar Sevaks, Sewing Teachers, and Panchayat Chowkidars. They were also given financial powers. The Panchayati Raj Department justified that these alternative arrangements were helping to restore the issuance of certificates and other routine works of the Gram Panchayats.
However, the striking employees on Friday said the alternative arrangements weren’t working at all, thus, causing a huge inconvenience to the people. The employees said that the decision of the government to sack the JEs has not affected their strike, and it will go on indefinitely till their demand for merger is met.
Why Zila Parishad Employees Are on A Strike
4,700 Zila Parishad cadre employees have been on indefinite pen-down strike since September 30, stalling the routine functions of Zila Parishads. The main demand of the Zila Parishad cadre employees is the merger with the Panchayati Raj Department so that they could avail benefits on a par with the employees of the other government departments.
These employees also said that despite a poll promise before the elections to the State Assembly, the current Congress government was denying them the new pay scale.
These employees argued that they were suffering financial loss, and they were not receiving dearness allowance (DA) and arrears while other employees were getting these benefits.
The employees are also demanding regularization under the contract policy. The strike has also received support from Panchayat representatives.
News
HP Cabinet Decisions: Construction in Shimla’s Green Belt Areas Permitted, Special Relief Package Approved
Shimla-Himachal Pradesh Cabinet on Wednesday held a meeting under the Chairmanship of Chief Minister Thakur Sukhvinder Singh Sukhu. Here are the decisions taken by the Cabinet:
Approval to Construction in Shimla’s Green Belt Areas
The Cabinet also decided to amend the Shimla Development Plan and construction would be permitted in green belt area lying above the road, from Navbahar to Ram Chandra Chowk to Machhiwali Kothi to Christ Church to Lakkar Bazar to IGMC to Sanjauli Chowk to Navbhar where there are no trees.
As per the Government, residential construction in the Green Belt area as per the Shimla Development Plan will be permitted only on those plots in which there are no trees.
It also decided to amend HP Town and Country Planning Rules to allow construction at a distance of 5 meters and 7 meters from Nallah and khad respectively.
The Cabinet decided to provide two Biswas of land in urban areas and three Biswas of land in rural areas who have been rendered homeless and those who are not left with land suitable for the construction of new houses.
HP Govt’s Special Package Approved
Nod was given a Special Relief Package for the disaster-affected families in the State as announced on 30th September 2023 by Chief Minister Sukhvinder Singh Sukhu.Under the Special Package:
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- The compensation of Rs. 1.30 lakh for a completely damaged house would be increased five and a half times to Rs. 7 lakh.
- The compensation of Rs. 4,000 for partial damage to a ‘kutcha’ house would be increased by 25 times to Rs. 1 lakh, while the compensation for partial damage to a ‘pucca’ house to be increased by 15 and a half times, from Rs 6500 to Rs. 1 lakh.
- Compensation of Rs. 25,000 given in case of damage to a shop or dhaba would also be enhanced four times to rupees one lakh.
- The HP Government will also provide increased financial assistance of Rs. 50 thousand instead of Rs. 3000 for damage to the cowshed. T
- The state government will provide assistance of Rs. 50 thousand for damage or loss to the belongings of the tenants thereby marking a 20 times increase, from the existing Rs. 2500.
- For the loss of large milch and draught animals compensation of Rs. 55000 and for goat, pig, sheep and lamb Rs. 6000 per animal compensation would be provided.
- The compensation of Rs. 3615 per bigha for damage to agricultural and horticultural land would be increased to Rs. 10 thousand.
- The compensation on crop loss of Rs. 500 per bigha is to be increased eight times to Rs.4000.
- The financial assistance for removing silt from agricultural and horticultural land is to be enhanced from Rs. 1384.61 per bigha to Rs. 5000.
This special package would be granted from 24th June 2023 to 30th September 2023.
‘Van Mitra’ Scheme Approved
The Cabinet approved the Forest Department ‘Van Mitra’ Scheme. Under this scheme, one ‘Van Mitra’ each, in 2061 Forest Beats would be engaged. It also decided to fill up 100 vacant posts of Forest Guards in the Forest Department on a contractual basis.
It decided to enhance the honorarium of Jal Rakshaks, Multi-Purpose Workers, para fitters and para pump operators of Jal Shakti Vibhag by Rs. 500 per month raising it to Rs. 5000, Rs. 4400, Rs. 6000 and Rs. 6000 respectively.
Chintpurni Passenger Ropeway
The Cabinet approved in principle to establish a passenger ropeway system from Chintpurni Baba Mai Dass Bhawan Parking to Chintpurni Temple in PPP mode in district Una with a cost of Rs. 76.50 crore.
It also gave its approval to hire 15 e-taxis in the Transport Department.
It decided to promote Amateur and Community Radios for ‘Alternate Communication during emergencies in all districts of the State. This would provide effective information exchange between information sources, emergency managers and those impacted by disaster or emergent situations.
The Cabinet decided to reduce the Additional Goods Tax on lead by 25 paise per kg.
It also accorded approval to grant 234 routes for private operators and additional 100 routes for tempo travelers to provide better transport facilities to the people of the State.
It also gave its approval for declaring Traffic Inspectors, Motor Vehicles Inspectors, Senior Motor Vehicle Inspectors of the Transport department and Assistant Sub Inspector and Head Constable of the Police Department as designed authority to compound the offences under various Sections of the Motor Vehicle Act, 1988.
Dharamshala’s first Solar Power Project Inaugurated, 750-kilowatt project to generate 20,000 units a day
HP Cabinet Decisions: Eligibility Criteria for BPL List, Special Task Force to Combat Drug Abuse & Other Decisions
HP Govt Takes Action Against Striking Zila Parishad Employees, Orders Fresh Recruitment
HP Cabinet Decisions: Construction in Shimla’s Green Belt Areas Permitted, Special Relief Package Approved
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