Petrol and diesel prices continue to inch closer to the Rs 100 per litre mark, but it is not just the common man who is worried about the rising costs. The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has also raised the red flag on its potential impact on the cost of manufacturing and transportation and called for a calibrated tax cut.
- Petrol and diesel have breached the Rs 97 per litre and Rs 88 per litre mark, respectively, in Mumbai
- High fuel prices expected to impact manufacturing and transportation sectors
- RBI Governor calls for coordinated action by the centre and states
Speaking at an event organised by Bombay Chamber of Commerce, he called for coordinated action to rein in taxes on petrol and diesel prices. He said, "Diesel and petrol act as cost push factor across a range of activities. It is not just the passengers who are using cars and scooters. High petrol and diesel prices also impact the cost of manufacturing and transportation. There is a need for coordinated action between the centre and the states because there are inherent taxes levied by both. There is need for coordinated and calibrated reduction of taxes."
Acknowledging the revenue pressure on central and state governments, given the pandemic and the need for a stimulus to kick-start economic revival and come out of the COVID-19 stress, he elaborated, "The revenue requirement and the compulsion of the governments are fully understood. But the impact on inflation is also something which comes in from the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production."
He is hopeful that going forward, both the central and state governments “will take some positive decisions in a coordinated manner.”
Earlier last week, Finance Minister Nirmala Sitharaman had also called for joint action by the states and the Centre to deal with the challenge of rising fuel prices in a way that helps the consumers.