TOPIC OF THE DAY –
“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 ₹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 ₹11.77 and ₹13.47 for a litre of petrol and diesel, respectively, followed by a ₹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 ₹3.75 and petrol by ₹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.
WORDS AND MEANINGS –
1) Run-up
Meaning: The period before an important event.
Example: Wolfson is playing a key role in the run-up to the elections.
2) Creep up
Meaning: If the value or amount of something creeps up, it slowly increases.
Example: Over the last year, the rate of inflation has crept up to almost seven percent.
Synonyms: Increase, Intensify
3) Persisting
Meaning: Continue in an opinion or course of action in spite of difficulty or opposition.
Example: “the minority of drivers who persist in drinking”
Synonyms: Persevere, Continue
Antonyms: Abandon, Stop
4) Flak
Meaning: Strong criticism.
Example: “you must be strong enough to take the flak if things go wrong”
Synonyms: Criticism, Censure
5) Cursory
Meaning: Hasty and therefore not thorough or detailed.
Example: “a cursory glance at the figures”
Synonyms: Casual, Superficial
Antonyms: Thorough, Painstaking
6) Gearing up
Meaning: To prepare for something that you have to do, or to prepare someone else for something.
Example: Politicians are already gearing up for the election.
Synonyms: Preparing
7) Intensifying
Meaning: Become or make more intense.
Example: “the dispute began to intensify”
Synonyms: Escalate, Increase
Antonyms: Lessen, Abate
8) Blow
Meaning: To cause someone or something, usually a plan or hope, to fail or to be affected very badly.
Example: The latest trade figures have dealt a severe blow to hopes of an early economic recovery.
9) Reversion
Meaning: A change back to a previous and often worse condition.
Example: The new procedures are being seen as a reversion to old, inefficient ways of working.
Synonyms: Change
10) Old-fangled
Meaning: Not modern; belonging to or typical of a time in the past.
Example: She’s very old-fangled in her outlook.
Synonyms: Old, Old-fashion.
11) Reluctance
Meaning: Unwillingness or disinclination to do something.
Example: “she sensed his reluctance to continue”
Synonyms: Unwillingness, Disinclination
Antonyms: Willingness, Eagerness
12) Gone down
Meaning: To move down to a lower level or place.
Example: He went down on his knees and begged for forgiveness.
13) Slash
Meaning: Reduce (a price, quantity, etc.) greatly.
Example: “the workforce has been slashed by 2,000”
Synonyms: Reduce, Cut
Antonyms: Raise, Create
14) Narrative
Meaning: A spoken or written account of connected events; a story.
Example: “a gripping narrative”
Synonyms: Account, Description
15) Raking in
Meaning: To earn or get a large amount of money.
Example: He rakes in over $200,000 a year.
Synonyms: Earning
16) Ad Valorem
Meaning: (of the levying of tax or customs duties) in proportion to the estimated value of the goods or transaction concerned.
Example: “ad valorem stamp duty at the rate of 1 per cent is payable”
17) Amplification
Meaning: The action of making something more marked or intense.
Example: “you’re an actor in that you are using emotion and amplification of ideas to make your point”
18) Reckons
Meaning: Establish by calculation; be of the opinion.
Example: “his debts were reckoned at £300,000”
Synonyms: Calculate, Compute
19) Anomaly
Meaning: Something that deviates from what is standard, normal, or expected.
Example: “there are a number of anomalies in the present system”
Synonyms: Peculiarity, Irregularity
20) Robust
Meaning: Strong and healthy; vigorous.
Example: “the Caplan family are a robust lot”
Synonyms: Strong, Vigorous
Antonyms: Weak, Frail
21) Embolden
Meaning: Give (someone) the courage or confidence to do something.
Example: “emboldened by the claret, he pressed his knee against hers”
Synonyms: Encourage, Hearten
Antonyms: Dishearten, Discourage
22) Bite the bullet
Meaning: Decide to do something difficult or unpleasant that one has been putting off or hesitating over.
Example: “decisions have to be taken and as director you have got to bite the bullet”
23) Nascent
Meaning: (especially of a process or organization) just coming into existence and beginning to display signs of future potential.
Example: “the nascent space industry”
24) Citing
Meaning: To mention something because it proves an idea, explains why something happened, or is an example of what you mean.
Example: Johnson resigned from the board after just six months, citing “differences of opinion”.
25) Vulnerable
Meaning: Exposed to the possibility of being attacked or harmed, either physically or emotionally.
Example: “we were in a vulnerable position”
Synonyms: Endangered, Unsafe
Antonyms: Invulnerable, Resilient
26) Pinch
Meaning: (of a shoe) hurt (a foot) by being too tight.
Example: “my new shoes pinch my big toe”
Synonyms: Hurt, Pain
27) Corollary
Meaning: A direct or natural consequence or result.
Example: “the huge increases in unemployment were the corollary of expenditure cuts”
Synonyms: Consequence, Result
Antonyms: Cause, Origin
