Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said that rising automobile fuel prices have a cost-push factor on the economy. He said that rising fuel prices not only affect vehicle drives but manufacturing, transportation and other aspects as well.
Das addressed the issue while speaking at the 185th foundation day of Bombay Chamber of Commerce and Industry. He said, “there is a need for coordinated action between the centre and states because there are inherent taxes levied by both,” adding that calibrated reduction of taxes was important.
He, however, said both the centre and the state governments have their revenue pressures and they are required to spend high sums of money to enable the country and the people to come out of the COVID-19 pandemic stress.
“We do realise that states and centre have their revenue pressures and require high sums of money to enable the country and people to come out COVID-19 stress,” Das said.
Das further said that the revenue requirement and the compulsion of the governments are fully understood. But having said that, the impact on inflation also is something which comes in from of the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production, the governor said.
Automobile fuel prices in India are breaking records on a daily basis as the central government has constantly denied to cut excise duty to mop-up more revenue amid COVID-19 pandemic.
Central and state taxes make up for 60 per cent of the retail selling price of petrol and over 54 per cent of diesel. The union government levies Rs 32.90 per litre of excise duty on petrol and Rs 31.80 a litre on diesel.