Why is the price of petrol high in India?
- The primary reason is to reduce consumption. India already suffers a lot from environmental problems with its major cities are already among the most polluted in the world.
- The government also says we are spending this money saved in infrastructure. But, can they tell what extra roads/highways they have constructed using this huge amount of money. A study once done by the European transport federation found that “Every billion of tax revenue shifted from labour onto fuel can be estimated to create some
- India like many European countries with high fuel taxes has a negative balance of trade, a chunk of which is due to oil imports. Keeping the prices high reduces the consumption and hence lowers impact.
If the petrol Prices drop down…
- Inflation will fall sharply if the retail fuel prices are lower. This will give room for the RBI to cut benchmark rates and lower the cost of borrowing. This is exactly what the finance ministry and RBI has been at loggerheads for a long while.
- The disposable income in the hands of the consumers will increase. This will help revive consumer sentiment and increase sales across companies across sectors
- The government is a very poor allocator of scarce capital due to leakages and corruption. The same money in the hands of actual customers will boost consumption and higher economic growth.
|Country Name||Price (in Indian rupees)|