How Petrol price is affecting the common people in India

As we all know, there is a huge hike in petrol price in India it almost touched ₹100 in some major cities in India. In our vision, there are mainly 2 reasons that are responsible for the price rise that are rise in the crude oil price and secondly higher central and state taxes which has raised the excise duty on petrol to ₹32.98 from 19.28/liter.

Image Source : maxabout

The price of petrol in all the countries basically depends on the price of crude oil. Which means, if the price of crude oil decreases then the price of petrol also decreases and vice versa. But in India, the petrol price rises higher and higher irrespective of the decreasing price of crude oil. But here the question arises, WHY, Let us understand how the petrol prices are raising step by step : 

Image Source : businesstech

How is it processed

1. Crude oil which we buy from international market cannot be used. It has to go through the refinery process at the very first place.

2. Central government then enforces excise duty on processed oil which plays an important role in fixing the price of that oil. This tax also varies time to time according to central govt.

3. Dealer applies there commission to it.

4. Then comes the tax applied by the state government that is Value Added Tax (VAT). Govt. of different states applies VAT on petrol accordingly. 

So even after the price of crude oil is reduced, the government fixes the price of petrol by increasing the tax.

I hope now you understand how the fuel prices cash flow goes from crude oil to the consumer filling fuel in car. It starts from Barrel purchase in USD then meshed up with huge taxes that lands into the high price of the consumers pocket. 

The cost of transportation has also been increased, due to which there has been a high inflation on goods and services. Due to this, the most impact is on commodities.

Image Source : thehindubusinessline

So what do you think, is it right for the govt. to compensate Covid's loss by increasing tax on petrol? Please share your views with us.