Former Finance Minister P Chidambaram To NDTV

Former Finance Minister P Chidambaram on rising fuel prices

New Delhi:

The increase of petrol and diesel prices by way of taxes imposed by the central government is extortion for consumers, P Chidambaram, Former Finance Minister told NDTV. ”One third of the price of petrol that consumers pay is a tax to the central government, so, a 33 per cent taxation on any commodity is extortion,” said Mr Chidambaram on rising fuel prices in an exclusive interview to NDTV.

Giving a break-up of fuel prices, Mr Chidambaram explained that if a consumer pays Rs 102 per litre for petrol, then Rs 42 goes to the oil companies companies (OMCs) – which includes processing of crude oil into fuel, Rs 33 goes to the central government as tax, Rs 24 goes to the state government, and Rs 4 to the dealers. ”Rs 33 out of Rs 102 is almost 33 per cent. This, according to me, is extortion,” said the former finance minister. 

The comments from the top politician comes at a time when petrol and diesel prices have been on rising spree in India, driven by a surge in global crude oil rates. Globally, oil prices jumped to a three-year high above $85 a barrel today, on forecasts of a supply deficit over the next few months, due to rising demand due to the easing of travel restrictions, according to news agency Reuters.

Back home, petrol and diesel prices continued to rise on Friday, October 15, following a surge in global crude oil rates. In the national capital, petrol and diesel rates jumped 35 paise to cost Rs 105.14 and diesel is being sold at Rs 93.87 per litre respectively, according to Indian Oil Corporation.

Calling the PM Modi-led government as the ”greediest” government that he has ever come across, Mr Chidambaram added that progressive taxes must be increased and the Centre should stop relying on a single source of revenue to collect its expenditure. ”Tax on petrol and diesel is regressive as the amount of tax paid on fuel by a rich person and a poor person is the same,” claimed Mr Chidambaram.

State-run oil refiners in India such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum revise the fuel rates on a daily basis, by taking into account the crude oil prices in international markets, and the rupee-dollar exchange rates. 

Meanwhile, a sharp drop in oil stockpiles in the United States and the member countries of the Organisation of Economic Co-operation and Development is expected to keep the global supply tight. On Thursday, the International Energy Agency said that the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd), according to Reuters. 

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