27 May, 2020
5 Min Read
Oil price pickle
PAPER- GS-III OIL CRISIS
The increased duty on fuel can fund welfare, but arbitrary methods will have implications
Union Petroleum Minister that the Centre is taking a ‘cautious and conscious approach’ of ensuring a balance in fuel prices and aims to use the resultant savings for welfare is on the face of it unexceptionable. With global oil prices still about 45% lower than 2019 closing levels despite coordinated supply cuts by major producers, India had an opportunity to pass on the benefit to consumers and provide a fillip to becalmed consumption.
With curbs on inter-State road transport still in place, contracting automobile sales unlikely to recover any time soon, job losses and pay cuts sure to shrink household budgets, it is hard to see transport fuel demand rebounding to pre-lockdown levels for at least one or two quarters. Add to that the fact that the Centre’s ambitious disinvestment target of ?2.1-lakh crore for this fiscal had included a stake sale in BPCL, and the petroleum products’ pricing approach gets even more complicated. With potential investors unlikely to be impressed by the lack of autonomy in the sector, it is in the government’s interest not to risk the health of the goose that lays the golden eggs.
Oil crisis past to present: https://www.aspireias.com/daily-news-analysis-current-affairs/Oil-Crisis-Past-to-Present
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