On Petrol & Diesel prices, RBI Governor suggests Centre & States hammer out tax reduction

On Thursday, RBI Governor Shaktikanta Das highlighted how high fuel prices not only impact cars and bike users but also manufacturing, transportation and other aspects as well. While addressing the 185th Foundation Day Celebration of the Bombay Chamber of Commerce and Industry, he aired his views on how diesel and petrol prices have an impact on the cost side. 

Das advised that the Centre and the states need to coordinate their efforts and reduce taxes. He observed how the price of fuel and politics surrounding it often become part of a tug-of-war between the Centre and states as each collects indirect taxes from fuel sales and neither is generally willing to compromise due to revenue considerations.

Earlier, in his own remarks on the high fuel prices, Petroleum Minister Dharmendra Pradhan had made yet another pitch for petroleum products to be brought under GST but indicated that the hold-up in this regard was on account of the Finance Ministry and the various states still not being on the same page. Apart from this Pradhan cited crude-side supply and pricing issues, highlighting that India has attempted to pressure OPEC and OPEC+ nations to be more judicious in their approach.

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Impact of Manufacturing on the cost of production

Das said in such a situation (where neither states nor Centre are willing to compromise on fuel rates) the need for revenue and compulsion of governments are fully understood. But there is also a need to understand that it also has an impact on inflation. Higher prices of petrol and diesel have an impact on the cost of manufacturing, he said. Inflation is the main lookout of the RBI.

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RBI is working on 'Digital Currency'

The Reserve Bank of India is working on Digital Currency and a progress document will be released soon with a comprehensive guideline, said Das amid renewed interest in cryptocurrencies. He added that the manufacturing sector is working to improve the pace of growth. With this, the MSME sector of the country has come forward as the economy's engine of growth. The Governor also stressed the need for companies to invest more in the healthcare sector.

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(With ANI Inputs)