Why are fuel prices rising and what the govt can do

Why are fuel prices rising and what the govt can do

Why are fuel prices rising and what the govt can do

Meanwhile, Congress-led group of Opposition parties have called for Bharat Bandh today against the rising fuel prices.

Protests over rising fuel prices have made a few state governments announce tax cuts, though the Centre has stayed adamant on not cutting excise duty on petrol and diesel. The reduction was carried out on May 31 in such a manner that the prices of both petrol and diesel will drop by a rupee.

Law minister Ravi Shankar Prasad on Monday blamed Organization of Petroleum Exporting Countries (OPEC) for the surge in worldwide prices of crude and said that the solution for the fuel price hike in not in government hands. The government would have to forego a tax revenue of Rs. 820 crore towards diesel, and Rs. 300 crore on petrol. The percentage increase was 20.5. "If taxes are cut, prices will decline significantly".

Nearly half of the fuel price is made up of taxes.

The VAT rates are as high as 39.12 per cent in Maharashtra on petrol, and Andhra Pradesh levies the highest VAT on diesel at 28.08 per cent.

The comments come on a day when opposition parties held nationwide protests against record high petrol and diesel prices.

A day after Bharat Bandh, petrol prices touched a new-high on Tuesday at Rs 80.87 per litre, and Rs 88.26 per litre in Delhi and Mumbai, respectively, ANI reported.

The fuel rates have been on fire since mid-August, rising nearly every day due to a drop in rupee value and rise in crude oil rates. Delhi charges a Value-Added Tax of 27 per cent on petrol and 17.24 per cent on diesel. "If we expand the tax base in the same proportion as we did past year then non-oil GDP ratio will go up", he said. Similarly, Rajasthan also reduced taxes on both petrol and diesel by 4% leading to a cut of Rs 2.50 per litre. In Mumbai, a litre of petrol costs Rs 87.77 and diesel comes for Rs 76.98, the notification said. Because the price is built up by excessive taxes on petrol and diesel.

There was a complete shutdown in Kasargode, the town that shares a border with Karnataka, as interstate buses kept off the roads.

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