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Why is the government not decreasing petrol and diesel price when it is cheaper now?

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Abhishek Abhishek
Answered on June 29,2020

The finance ministry was looking to bring down the fiscal deficit—the difference between the government’s income and expenditure—to 3.5% of GDP this financial year. With the economy coming to a virtual standstill under the coronavirus lockdown, this target may be missed by a wide margin, especially with revenues dropping and the government spending more on stimulus packages. The center’s fiscal (situation) remains stretched due to the economic slowdown triggered by Covid-19. Hence, they will try to make up for the revenue shortfall by increasing tariffs on oil.

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Gautham Gautham
Answered on June 29,2020

The fall in crude oil prices has not resulted in a reduction in the retail prices of petrol and diesel. The decreased consumption of various fuels, especially during the lockdown period, would have an adverse impact on the state governments’ revenues. So Government is keeping the benefit for itself, and making up for tax shortfall.

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