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| Arvind kejriwal |
Arvind Kejriwal questions why petrol prices remain high when crude oil is at $70 a barrel. Explore the math behind fuel pricing, the impact on inflation, and why common man deserves relief.Fuel Prices in India: Why Aren't Petrol and Diesel Costs Falling Despite $70 Crude Oil?
It is a question that has been echoing across tea stalls, office canteens, and family dinner tables across the country. If crude oil is hovering around $70 per barrel, why are we still paying upwards of ₹94–₹100 per litre for petrol in most Indian cities? And more importantly, why isn't the government stepping in to ease the burden on the common man?
Delhi's former Chief Minister and prominent opposition leader, Arvind Kejriwal, has once again trained his guns on the central government over this very issue. And honestly, his arithmetic is hard to dismiss.
The Math That Doesn't Add Up
Kejriwal, known for his direct and often blunt style of dissent, recently argued that at $70 per barrel, the internal calculation of fuel pricing does not justify the retail rates Indians are being forced to pay. Let us break down his logic in plain numbers.
Crude oil price: ~$70 per barrel
Exchange rate (USD/INR): ~₹83–₹84
Cost per barrel in rupees: ~₹5,800–₹5,900
Cost per litre (after refining and freight): ~₹50–₹55
Now, here is where the controversy begins. Kejriwal asserts that after adding central excise duty, state VAT, and dealer commissions—the retail price should ideally be around ₹82 per litre for normal petrol, without even considering E20 blending.
And if the government is genuinely serious about promoting E20 (20% ethanol-blended petrol), the cost should drop further to around ₹70 per litre, since ethanol is cheaper and largely domestically produced.
So, why are we still staring at price boards showing ₹94, ₹96, or even ₹100+ in several states?
The Missing Piece: Taxes and Silence
Let’s be brutally honest here. The gap between Kejriwal's projected price and the actual pump price is not magic—it is taxation.
The central government levies a significant excise duty on every litre of petrol and diesel. On top of that, state governments add their own VAT. In many states, the combined tax component makes up nearly 50–60% of the retail price.
In fact, even when global crude prices crashed during the pandemic, Indian consumers did not see a proportional dip in retail rates. The government had then increased excise duties to shore up revenues. While some reductions were made later, the base structure still leans heavily on fuel taxes as a revenue stream.
And that brings us to the uncomfortable question: Is fuel pricing driven by economics or by fiscal convenience?
Why Fuel Prices Are Everybody's Problem
Here is where Kejriwal’s argument hits home. He rightly points out that fuel prices are not just about fuelling vehicles—they are about fuelling everything else.
Vegetables, grains, and dairy products travel hundreds of kilometres via trucks.
Construction material, cement, and steel move on diesel-guzzling carriers.
Even your morning bread and evening milk see price hikes because delivery vans run on diesel.
When petrol and diesel prices remain stubbornly high, transportation costs spike. And every transporter passes that burden down the supply chain—until it reaches your wallet.
So yes, reducing fuel prices is not merely a populist gesture; it is a structural intervention that could cool down inflation in a meaningful, across-the-board manner. It is a move that could put money back into the pockets of millions without the government having to announce complex subsidies or cash transfer schemes.
The Common Man's Cry for Relief
Let’s step away from the policy jargon for a moment.
India is still a price-sensitive country. A ₹10 reduction in petrol price may not sound like much to the affluent, but for a daily-wage earner, a small-time shopkeeper, or a middle-class family with two scooters, it makes a tangible difference.
When Kejriwal says, "Give the common man the relief which is much needed," he is echoing what millions feel but rarely articulate. In a time when household budgets are stretched thin by rising food costs, school fees, and healthcare expenses, every rupee saved at the fuel pump translates into a little more breathing room.
What Should the Government Do?
To be fair, the government has its own compulsions. Fiscal deficit targets, infrastructure spending, and welfare schemes all require money. And fuel taxes are one of the easiest ways to generate quick revenue.
But here is the counterpoint—lowering fuel prices can boost consumption, improve business sentiment, and indirectly increase GST collections from other sectors. It is not a zero-sum game.
A phased, transparent approach could work:
Publish a fuel price breakdown on a daily basis, showing exactly how much goes to central tax, state tax, dealer commission, and base price.
Link fuel taxes to a band, so that when crude falls, benefits are passed on automatically.
Promote E20 aggressively by providing incentives to oil marketing companies and ethanol producers, so that the cost benefit reaches the consumer sooner.
Final Thoughts: A Question of Will, Not Economics
At the end of the day, the debate is not about arithmetic—it is about political will.
Arvind Kejriwal may be an opposition leader with his own political motives, but his argument on fuel pricing resonates because it is built on simple, verifiable numbers. When crude oil is at $70 a barrel, and the exchange rate is stable, the Indian consumer has every right to ask: "Why am I still paying so much?"
The government has a golden opportunity here. By reducing fuel prices, it can not only tame inflation but also restore a degree of trust among the common public. In a democracy, that trust is the most valuable currency of all.
Until then, the common man will keep watching the price board—and hoping for a change that seems long overdue.
To be fair, the government has its own compulsions. Fiscal deficit targets, infrastructure spending, and welfare schemes all require money. And fuel taxes are one of the easiest ways to generate quick revenue.
But here is the counterpoint—lowering fuel prices can boost consumption, improve business sentiment, and indirectly increase GST collections from other sectors. It is not a zero-sum game.
A phased, transparent approach could work:
Publish a fuel price breakdown on a daily basis, showing exactly how much goes to central tax, state tax, dealer commission, and base price.
Link fuel taxes to a band, so that when crude falls, benefits are passed on automatically.
Promote E20 aggressively by providing incentives to oil marketing companies and ethanol producers, so that the cost benefit reaches the consumer sooner.
Final Thoughts: A Question of Will, Not Economics
At the end of the day, the debate is not about arithmetic—it is about political will.
Arvind Kejriwal may be an opposition leader with his own political motives, but his argument on fuel pricing resonates because it is built on simple, verifiable numbers. When crude oil is at $70 a barrel, and the exchange rate is stable, the Indian consumer has every right to ask: "Why am I still paying so much?"
The government has a golden opportunity here. By reducing fuel prices, it can not only tame inflation but also restore a degree of trust among the common public. In a democracy, that trust is the most valuable currency of all.
Until then, the common man will keep watching the price board—and hoping for a change that seems long overdue.
What do you think? Should the government slash fuel prices to give relief to the common man? Share your thoughts in the comments below.
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