BJP MP Godam Nagesh raised an unstarred question to the Minister of State for Petroleum and Natural Gas Suresh Gopi regarding the deregulation of petrol prices and its implications. The Adilabad MP inquired whether the aim of deregulating petrol prices was to link retail prices with the market and if it benefitted the common man.
Minister Gopi in his reply confirmed that petrol prices have been market-determined since June 26, 2010. He explained that Oil Marketing Companies (OMCs) are responsible for pricing decisions, which are meant to attract higher investments, spur market competition, reduce costs, and improve efficiency and service standards. Deregulation also encourages fuel conservation and adoption of fuel efficiency practices. Additionally, it enables the government to allocate more funds for social sector schemes benefiting the common man.
When asked about the period taken to adjust petrol prices in the last two years, Gopi highlighted the volatility of crude oil prices, which impact petrol pricing. He provided a comparative analysis, noting that India’s crude oil prices (Indian Basket) fluctuated from $84.49/bbl in March 2024 to $89.46/bbl in April 2024, and to $85.89/bbl in July 2024 (up to 19 July 2024). Despite the volatility, India remains the only major economy where petrol and diesel prices have decreased in recent years.
Gopi also shared data illustrating the percentage change in petrol and diesel prices between November 2021 and April 2024. In India (Delhi), petrol prices decreased by 13.65%, while diesel prices fell by 10.97%. In contrast, countries like France, Germany, Italy, Spain, the UK, Canada, and the USA saw increases in petrol and diesel prices ranging from 5.79% to 22.24%. Neighboring countries such as Pakistan, Bangladesh, Sri Lanka, and Nepal experienced significant hikes in fuel prices, with Sri Lanka witnessing a 75.54% rise in petrol prices and a 142.91% surge in diesel prices.
To shield citizens from high international crude prices, the government has implemented several measures, he said. These include diversifying the crude import basket, imposing windfall taxes on petroleum product exports, ensuring the availability of petrol and diesel through Universal Service Obligation provisions, and increasing ethanol blending in petrol. The Central government also reduced Central Excise duty on petrol by a total of Rs 13/litre in two tranches in November 2021 and May 2022, fully passing the benefits to consumers. In March 2024, OMCs reduced retail petrol prices by Rs 2 per litre. The current retail selling price of petrol in Delhi stands at Rs 94.72 per litre.
JDU MPs Dinesh Chandra Yadav, Giridhari Yadav and Samajwadi MP Anand Bhadauria asked Gopi about the potential inclusion of petroleum products under the Goods and Services Tax (GST).
The MPs queried whether there were any proposals to bring petrol, diesel, LPG, and CNG under the GST regime. The minister explained that under Article 279 A (5) of the Constitution, the GST Council is responsible for recommending the date when GST would be applied to petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, and aviation turbine fuel (ATF).
According to section 9(2) of the CGST Act, 2017, the inclusion of these products requires the GST Council’s recommendation. To date, the GST Council, which includes representatives from all states, has not recommended the inclusion of these goods under GST. However, LPG is currently covered under the GST regime.
Regarding whether the Ministry of Petroleum and Natural Gas has sent any proposals to the Ministry of Finance for the inclusion of petroleum products under GST in the last five years, Gopi confirmed that the GST Council considered this issue during its 45th meeting on 17th September 2021. However, the council deferred the decision, citing the need for detailed deliberations due to the substantial repercussions on both state and central exchequers. Since then, the GST Council has not included this matter as an agenda item for further deliberation.
The MPs also asked whether including petroleum products under GST would make their prices more reasonable and affordable for consumers. Gopi stated that since these products are not currently covered under GST and no recommendation has been made by the GST Council, it would be premature to assess the potential impact on consumer prices.
