It seems that oil prices in India are hurrying up to an unwanted century. In spite of all possible attempts, the petrol prices are shooting up. In Mumbai, petrol prices have crossed Rs 90 mark. There is no doubt that petrol price rates are at all time high across the country.Although the situation is slightly better in Delhi and other states, still the price hike is imminent. No doubt, no economy can live peacefully with such an increasing graph. The Narendra Modi government has tough decisions to make in this changing circumstances.
Statistically, India is the third largest importer of crude oil. As India doesn’t have that high oil reserve, it has to rely on other countries, especially those in the Middle East for a consistent supply of petrol and diesel.The most worrying aspect is the condition of the Indian rupee. Price of petrol in India is directly linked to Rupee valuation in the international market.As petrol prices have gone for a toss, it has become very difficult for the Indian government to get hold of the situation. The prices of everyday commodities are increasing day by day and market is crippled due to inflation.
Big investors look very protective right now and somehow or the other, the manufacturing sectors are facing a crisis due to the dilemma. If Indian rupee keeps on losing ground against Dollar, it would indeed indicate downfall of the Indian economy.
There are two perspectives which need to closely look upon at this juncture of time. First and foremost, the Indian government must acknowledge the utility or importance of having alternative sources of energy.Renewal sources of energy are pro-ecological but building such infrastructure isn’t at all an easy task. Secondly, the role of the central government and state governments in price determinant needs to be analysed.
It is often being complained that petrol prices in India are too high due to excise duty, commission paid to petrol pump dealers and VAT charged by the state governments. Time and again, the applicability of GST needs to be analysed.Otherwise, even if the central government tries to change repo rates and reverse rates, the whole economy will be in great distress, which won’t be a good sign for various ongoing developmental projects in India.