THE HINDU Editorial Vocabulary - June 4, 2018 - Topic 1

Fuel fractions: on petrol, diesel prices

Last Wednesday, the public sector oil marketing companies cut the prices of petrol and diesel by one paisa a litre — the first reduction for a while in motor fuel prices that had been frozen for 19 days in the run-up to the Karnataka elections, only to creep up thereafter. Not surprisingly, the Centre, already under fire for persisting with high fuel taxes despite the rise in the global prices of crude in recent months, faced fresh flak over this cursory cut. The same day, the Kerala government approved a reduction in the sales tax on motor fuel products to effect a Rs.1 cut in prices per litre in the State starting June 1. 

For the BJP-led government at the Centre, gearing up for several Assembly elections this year followed by the general election in 2019, the pressure to check pump-level fuel prices is intensifying. Several formulations are said to be under consideration to soften the blow to the consumer, including a reversion to old-fangled ways such as asking oil producers to bear some of the burden. But there still remains great reluctance to consider the option of reducing excise duties that were raised nine times between November 2014 and January 2016 when global crude oil prices had gone down. It is in this context that Kerala’s decision to slash the sales tax on fuel changes the narrative of the debate as States have also been raking in easy oil revenue.

In all, the government raised central excise duties by Rs.11.77 and Rs.13.47 for a litre of petrol and diesel, respectively, followed by a Rs.2 a litre cut announced in October 2017, when prices started rising. Additionally, States impose ad valorem duties on fuel products, which go as high as 39.27% (in Maharashtra) and average about 26% — so higher prices mean more tax revenue for them. To make matters worse, they levy value-added tax on the fuel price inclusive of central excise duties, not the base price, leading to double taxation and further price amplification. An SBI research report reckons that prices could go down for diesel by Rs.3.75 and petrol by Rs.5.75, a litre, if only this tax-on-tax-included-price anomaly was fixed. Giving up easy money is never easy, but the recent robust collections from GST should embolden both the Centre and States to bite the bullet now. Rising crude prices spike inflation and the trade deficit, putting pressure on the rupee and GDP growth. Industry has warned that domestic oil pricing policies are hurting the nascent recovery, and global rating agencies are already slashing India’s growth expectations for this calendar year, citing the oil issue. Two years ago, Petroleum and Natural Gas Minister Dharmendra Pradhan had said that the government was raising excise duties to protect the consumer. The logic: consumers could become vulnerable if exposed to low prices and feel a greater pinch when prices went up. The obvious corollary of that stance — that high taxes on fuel need to be cut when prices rise again — has been ignored so far.

Vocabulary

Reduction: the action or fact of making a specified thing smaller or less in amount, degree, or size.

Example: Talks on arms reduction

Synonyms: cutback, cut, downsizing, scaling down, trimming, pruning, axing

Persist: continue firmly or obstinately in an opinion or a course of action in spite of difficulty, opposition, or failure.

Example: The minority of drivers who persist in drinking

Despite: without being affected by

Example: He remains a great leader despite age and infirmity

Synonyms: in spite of, notwithstanding, regardless of, in the face of, for all

Intensify: become or make more intense.

Example: The dispute began to intensify

Synonyms: escalate, increase, step up, boost, raise, strengthen, augment

Narrative: a spoken or written account of connected events; a story.

Example: The hero of his modest narrative

Synonyms: account, chronicle, history, description, record, report, story

Reckon: conclude after calculation

Example: He reckons that the army should pull out entirely

Synonyms: believe, think, be of the opinion/view, be convinced, dare say

Nascent: just coming into existence and beginning to display signs of future potential.

Example: The nascent space industry

Synonyms: just beginning, budding, developing, growing, embryonic, incipient

Vulnerable: susceptible to physical or emotional attack or harm.

Example: We were in a vulnerable position

Synonyms: helpless, defenseless, powerless, impotent, weak, susceptible

Ignore: refuse to take notice of or acknowledge; disregard intentionally.

Example: He ignored her outraged question

Synonyms: disregard, take no notice of, pay no attention to, pay no heed to