Petrol diesel price rising effect on Indian economy

Effect of rising petrol and diesel prices on Indian economy

Petrol and diesel prices in India are seeing a steady increase. Presently the price of petrol is running above ₹102 in some cities of India. Whereas diesel prices have also reached above ₹99. And experts are expressing the possibility of it becoming ₹ 100 per liter soon.

Inflation has reached its highest level in India due to rising petrol and diesel prices. Another effect of this has also been that there is a continuous decline in consumer demand in India. Because of this, the Indian economy is now facing a new difficulty.

The impact of rising petrol and diesel prices on the Indian economy was less visible. For this the Government of India has thought of a new idea.

In order to keep the inflation index low, the Government of India has almost decided to change its base year. And now it will be decided at the cabinet level. Recently, a committee was constituted by NITI Aayog for this. The report of which has now arrived. The impact of rising prices of petrol and diesel can be seen on other sectors of the economy like manufacturing, import, export and all sectors.

Why petrol and diesel are getting increase in India

Petrol and diesel prices in India are at their all-time high. There is also a steady increase in this. India currently has the world’s most expensive petrol and diesel.

There are many reasons for the increase in the prices of petrol and diesel in India. At present, the demand for crude oil has reached its record level of last 3 years internationally. After the corona virus epidemic, economies around the world are seeing a boom. Due to this also the demand for crude oil has increased internationally. In such a situation, crude oil has reached above $ 72 per barrel at this time. Experts are expecting it to reach above $ 85 per barrel in the coming time.

Another main reason why petrol and diesel are expensive in India is the tax levied on it. Petrol and diesel are taxed at the state and central level in India. Whereas petrol and diesel do not come under the purview of GST in India. At present, the central and state governments together levy tax on petrol and diesel around ₹ 64 per liter. Which is the highest in the world. The tax levied on petrol and diesel in India is more than its actual cost. That is why the prices of petrol and diesel are so high. The actual price of petrol and diesel in India without tax does not exceed ₹38 per liter.

In such a situation, it is clear that till the tax on petrol and diesel is not cut in India. There is no possibility of any reduction in this in the coming times as well. The same experts are saying that if the international crude oil prices go up to $85 per barrel or above, then the price of petrol and diesel in India can go from ₹ 125 to ₹ 130 per liter.

Record breaking rise in inflation

Inflation has reached its highest level due to rising prices of petrol and diesel. If we talk about the retail inflation rate, it has now increased to around 6.09%. Which is the highest ever. Apart from this, the wholesale inflation rate has also reached above 10.49%. Due to this, the RBI is expressing the fear of increasing inflation in India.

If we talk about the prices of edible oil, then it has reached above ₹ 200 per liter. And if you want to buy good brand edible oil, its prices are running around ₹250 per litre. Which are the highest prices ever. The Indian National Congress and all the opposition parties are also asking questions to the government regarding this.

Unemployment

Due to the effect of Corona virus, the unemployment rate in India has already reached around 14.5%. Rising petrol and diesel prices have now increased the problems of the people even more. And it has become difficult for them to find employment.

The Indian economy is witnessing a severe lack of demand due to rising petrol and diesel prices. Due to this people are losing their jobs or companies are now avoiding hiring new people. Both private and government companies in India want to cut their expenses by stopping the recruitment of new people. in order to increase their profits.

The wealth of India’s two biggest industrialists Mukesh Ambani and Gautam Adani has more than doubled in the last two years. This clearly shows that the impact of the corona virus and the increased prices of petrol and diesel has been had on the Indian economy. Not that much has fallen on the wealth of the rich. During this time there has been a record-breaking increase in the wealth of Mukesh Ambani and Gautam Adani in India. At present, the wealth of India’s richest man Mukesh Ambani has been stolen at $ 84 billion. At the same time, the wealth of the second richest person, Gautam Adani, is currently US $ 78 billion.

According to the data of trade organizations, unemployment in India has reached the highest level at this time. In the last 1 month alone, about one crore fifty lakh people have lost their jobs in India. And the question of new jobs being created does not arise at all.

Trade organizations say that if the situation does not improve soon, then the problem of unemployment in India may increase even more in the coming times.

Companies are also making huge cuts in the salaries of those who are currently working. Due to this, even those who are working are not getting their full wages. In such a situation, if the demand is to increase in India’s economy, then the government will have to reduce the prices of petrol and diesel. If this does not happen then not only the economy will be affected. Rather, fewer jobs will be created. Due to which a big crisis will arise in front of a country with a huge population like India.

India’s growth rate slows

India’s growth rate has reached its lowest level in the last 1 year. Last year’s growth rate in India was -7.3%. Which is the lowest growth rate ever. India’s economy has never gone so low after India’s independence. However, experts say that the biggest contributor to this is the corona virus epidemic. But it cannot be denied that due to expensive petrol and diesel, India’s economy is failing to rise once again.

At the same time, some experts are saying that if the situation does not improve in the coming times, India’s economy will become like that of Latin American countries. The countries of Latin America are among the poorest countries in the world. These countries are considered as third class countries. India is currently included in the category of developing countries. Where the process of development is continuously going on. But due to the corona virus epidemic and expensive petrol and diesel, crores of people have gone below unemployment and poverty line.

According to a recent survey, the income of 97% of the people in India has decreased in the last 1 year. There are only 3% of people whose income has either increased or is stagnant.

India’s growth rate in the last quarter of the current financial year has been 1.6%. However, this cannot be considered a very good situation.

You can understand this from the fact that the per capita income of Bangladesh has now exceeded that of India. Whereas Bangladesh became independent in 1971.

It is believed that Bangladesh has achieved this position due to the right central arrangement and the right modalities to deal with the corona virus. Experts say that at present the price of petrol and diesel in Bangladesh is around ₹ 71 per liter. Which has helped the economy there to rise. Whereas the prices of petrol and diesel in India have gone up to ₹ 100 per liter or even more.

Bangladesh’s per capita income now stands at US$ 2227. At present, India’s per capita income is 1947 dollars. Which is $280 less than Bangladesh.

decrease in foreign trade

Due to the corona virus epidemic, there has been a huge reduction in India’s foreign trade. Due to the cost of petrol and diesel, the cost of manufacturing has also increased here. Due to this there has been a huge reduction in both imports and exports of India.

At the same time, the government is saying that the reduction in imports in India is due to the self-reliant vision of the Prime Minister. But the government has no answer as to why exports are declining.

The proportion in which imports are decreasing in India. About the same proportion, there is also a decrease in exports. One of the main reasons for this is the increase in cost. The major part of the cost increase in India comes from petrol and diesel. Let us tell you for information that India imports 80% of its crude oil from abroad. In India, most of the goods are transported by trucks and goods trains. Both trucks and goods trains currently run on diesel in most parts. And diesel prices are currently at their all-time high. Due to this the cost of freight has increased. Due to this, foreign exports have also been affected.

According to a BBC report, India’s total foreign trade in the year 2019-20 was $ 474.7 billion. Which has come down to $345 billion in the year 2020-21. This has also dealt a blow to the self-reliant India project of the Prime Minister of India, Narendra Modi. During this period not only India’s imports have seen a huge reduction. Rather, there has been a huge reduction in exports as well. As much as imports into India have been reduced. More than that, India’s exports have decreased. In such a situation, there does not seem to be any good news coming from the foreign trade front for India.

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