Prices of fuel may cut down to Rs. 4-5 in some parts of India if the central government worked with a plan which concludes a marginal cut of the excise duty added on the fuel, provided that it is successful in its efforts to convince states to cut down the VAT charges on fuel and oil marketing companies to reduce their sales commission.

According to the senior member of BJP party provided the detail of the plan to Hindustan Times on condition of anonymity. According to him, the central government is very concerned about rising fuel prices and the cut could happen “very soon”. But it is very important that states and oil marketers play their part, he also added, “Centre alone cannot bear the burden”.

Fuel prices have increased continuously from past fortnight. On Wednesday, petrol was sold at Rs 78.42 per litre and diesel at Rs 69.30 a litre.

Oil prices have gone up at above level. In 2016-17, an average price of crude in India’s market was $47.56 a barrel which rose to $56.43 in 2017-18 also it was recorded $63.80 in March. By end of April, it was recorded $69.30.

Oil is currently priced nearly to $75 a barrel, decreased from a height of almost $80 last week.

It happened because a significant increase of fuel price is taxes added on it. While it differs from state to state, the pattern is usually similar; in Delhi, for instance, central taxes account for around 25% of the retail price of petrol; state taxes, 21.2%, and dealer margins, 4.7%. When the price of fuel decreased, the NDA government increased duties and taxes.

Other government officials said that public spending to the tune of Rs 120,000 crore was facilitated by these duties.

“At the time when private companies were not willing to invest money into the country, the Modi government using prudent public finance policy decided to push up the public sp.

Of the central taxes, 42% is given to the states.

The decision to cut fuel prices, relaxing the country people come even as the government is considering a longer-term solution as admitted by petroleum minister Dharmendra Pradhan last week. While the government haven’t provided any details of the alternatives, one, widely reported in the media, involves the creation of a so-called consumers’ collective of countries such as China and India to drive harder bargains with major oil suppliers’ countries such as Saudi Arabia.

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