Great News: Petrol prices have fallen Rs 40/liter!

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Petrol prices affect the psychological inflationary number for most middle & lower classes. However, the govt is usually a “price taker” dependent on global oil prices. Brent has fallen from $60sh to $38 today. In May, ex-refinery prices fell month on month while international prices rose. Expect reversal in ex-refinery prices, government should (is) pass (ing) more benefits to consumer but needs to tax adequately for Federal pockets.

Even if global oil prices hover $40sh – & ex-refinery prices increase Rs 10-15/liter – govt should keep the Tax (especially federal bound PDL) at Rs 40-45/liter. Masses are just about fine with Rs 85-90/liter vs Rs 115sh in February. Provided optimum direct cash transfers are made to impoverished keeping job prospects intact.

Or maybe govt wants to keep absolute taxes Rs 35/sh & pass on benefit of Petrol & Diesel prices to keep the businesses/consumption alive because of multiplier effect & tame inflation numbers? Petrol is highly inelastic so a marginally higher tax is a win-win for the country.

Interest rates are down 5.25%, electricity/gas bills waived, principal repayment deferred, cheaper loans available & budget would have incentives. Spare the govt if it taxes petrol slightly more.

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