Why is the Government unable to control petrol prices?

TL;DR

The government is increasing petrol and diesel prices due to a decrease in revenue and increasing fiscal deficit. Electric vehicles may be a solution, but infrastructure and high demand for copper pose challenges.

Transcript

----music----- ‘Bhaiya, please give me 10rs petrol’ ‘We don’t have 10rs petrol, the car doesn’t move with 10rs petrol’ I don’t need petrol to run the bike but to burn it Namaskar, in this video we’ll be talking about the hike in petrol and diesel prices, why these prices are increasing, what alternatives do people have, why the government is increa... Read More

Key Insights

• ☄️ The majority of the government's revenue comes from taxes, with 53% derived from this source.
• 😮 The increase in excise duty and VAT, along with rising crude oil prices, contributes to the high prices of petrol and diesel.
• 🥺 The government's fiscal deficit is increasing, leading to a need for enhanced revenue sources.
• 😮 Electric vehicles may be a solution to mitigate the impact of rising petrol and diesel prices, but infrastructure and the increasing demand for copper pose challenges.
• ✋ The government's focus on capital expenditure and investment in manufacturing contributes to the need for higher income sources.
• 😌 The alternatives to high petrol and diesel prices lie in the adoption of electric vehicles, although the infrastructure in India is not yet ready for widespread usage.
• 🥺 Both the central and state governments are driven by a desire to collect taxes, which may lead to people seeking alternative solutions and opting for electric vehicles.

Questions & Answers

Q: Why did the government increase the excise duty on petrol and diesel?

The government increased the excise duty on petrol and diesel to recover the decreased tax revenue during COVID-19 and to enhance its overall revenue.

Q: What is the impact of rising crude oil prices on petrol and diesel prices?

Rising crude oil prices contribute to the overall increase in petrol and diesel prices, as taxes are levied on top of the base price.

Q: Will the excise duty on petrol and diesel decrease in the future?

It is unlikely that the excise duty on petrol and diesel will decrease, as the government needs to address its growing fiscal deficit and focus on enhancing its revenue sources.

Q: Why are petrol and diesel not included under GST?

Petrol and diesel are not included under GST because the government wanted the flexibility to collect higher taxes whenever needed, which is not possible under the highest tax slab of 28% in GST.

Summary & Key Takeaways

• The government's revenue is mainly derived from taxes, and due to the decrease in tax revenue during COVID-19, the government increased the excise duty on petrol and diesel.

• The increase in excise duty and VAT, coupled with rising crude oil prices, has led to the high prices of petrol and diesel.

• The government's fiscal deficit is growing, and increasing its revenue through petrol and diesel taxes is necessary. The government also plans to focus on capital expenditure and investment in manufacturing.