High petrol and diesel prices are in news again for the high taxes levied on them, rather than the international crude oil prices. People have extremely conflicted views on this matter.

As of now, petrol and diesel prices have risen to their highest level in three years. The prices will not go down anytime soon and so it might be a good decision to look at the positives of this situation.

Ever since the Narendra Modi government introduced the daily price revision system of the petroleum products to avoid sudden spikes in prices that caused popular revulsion, the cost to the consumer has been going up on a daily basis, though in small measure.

For example, between 1 July and 12 September, the price of petrol for the common man went up by Rs 5.18 per litre. Similar has been the hike in the diesel prices in Maharashtra. It now costs Rs 62.37 per litre in Mumbai.

If we look into the matter ecologically, low price of fuel is detrimental. If we want to move away from fossil fuels to cleaner forms of energy, India’s fuel taxation policy is sensible.

Also, India’s urbanization needs call for more public transport, and bringing petrol prices down can be disastrous.

Despite severe taxation, demand for petrol-fuels grew 5 per cent in 2016-17, even after keeping in mind the general economic slowdown, intensified by demonetization.

High taxes on oil will also enable higher public investments. In his last budget speech, Finance Minister Arun Jaitley said that Rs 3,96,135 crore would be spent on creating and upgrading infrastructure this year.

Another point being, most of our oil comes from the Gulf, including Islamist states like Saudi Arabia, Iran and Iraq. Higher demand means enriching these Islamist governments, which means the surpluses generated in their budgets will partly be spent on promoting Islam and jihadi groups.

Chief Economic Advisor Arvind Subramanian has often argued that India is doing more than its share of climate change since it has one of the world’s highest proportions of taxes on carbon emissions when its per capita income is taken into account.

While defending the higher duty, Pradhan has said increased revenue was only going into welfare activities of building more roads and providing irrigation and drinking water facilities. He said oil companies would continue to have pricing freedom.

As a matter of fact, we should be using less and fewer fossil fuels as they’re bad for global warming as well as public health. The best way to ensure this is taxation.


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