Rise in petrol prices affecting the tourism industry, COVID-19 vaccine increasing the cost of transport

Rise in petrol prices affecting the tourism industry, COVID-19 vaccine increasing the cost of transport
Photo Source: dawn.com

The price of fuel in India is simultaneous with global prices because India imports most of the fuel to support the market.

The price of petrol and diesel have gone up by Rs 2 and Rs 3.50 respectively since November 19, holding them unchanged for 59 days. Diesel is priced at Rs. 73.87 per litre while petrol is priced at 83.71 per litre in the NCR region. The price of petrol and diesel in Gangtok has gone up to Rs 85/litre and Rs. 76.40/ litre respectively (as of December 7, 2020)

The global rise of crude oil prices and petroleum products due to the possibility of an effective vaccine for COVID-19 (it gave us the hope for the return of normalcy in the society and economy) are the main reasons for the rise of petrol and diesel prices. It is a measure taken by the Oil Marketing Companies (OMCs) to neutralize the losses suffered during the pandemic.

PETROL PRICES AND TAXES

Bharatiya Janata Party (BJP) has been by blamed Congress General secretary in-charge of Uttar Pradesh, Priyanka Gandhi on Sunday. She said that the BJP has earned around Rs 3 lakh crore additional revenue by increasing the excise duty on fuel in 2020.

If the BJP has earned around 3 lakh crore additional revenue where is the money going? The BJP government is supposed to be providing relief for the people but they haven’t. So the question remains, where does all the money go? “Rs 20,000 crore on parliament corridor. Rs 16,000 crore for Prime Minister’s plane and Rs 2 crores being spent on advertising daily,” Priyanka Gandhi tweeted, Union Minister of Petroleum and Natural Gas.

Fuel prices have gone up all over the globe. The rise in fuel prices in the international market was due to recent elections in America and other reasons. “There has been a rise in fuel prices in the international market because of recent elections in America and other reasons”, said Pradhan (ANI)

The latest price hike of petrol is a 30-paise hike and it is the 56th revision in Delhi since April 1 (according to the data provided by PPAC) whereas the price hike of diesel is a 26 paise hike for the 67th time.

We saw a reduction in the price during the months of September and October. Prices have moved up since then. The price of petrol in cities like Mumbai is Rs 90 per litre whereas diesel is sold for Rs 73.87.

Additional duties and cesses levied by the centre and the state government caused an increase in price hike. Road and infrastructure cess, as well as Special Additional Excise Duty on petrol and diesel, was increased by the Central Board of Indirect Taxes and Customs in May 2020. The State and Central government increased the duties on petrol and diesel to boost revenues since the pandemic severed and reduced the economy.

The taxes accounted for by the State and Central government is around 62% and 57.5% respectively in the NCR region. The excise duty was increased by the central government since the beginning of the financial year. The VAT (on the price of petrol as well as the dealers’ commission collected by the state government) is a quarter of the price. 

Taxes and duties cover almost 63% of the base price of petrol in Delhi. The base price of petrol and diesel in Delhi is three times less than the amount at which a buyer gets it from the retailer.

HOW IT AFFECTS THE TOURISM INDUSTRY

Transportation is an integral part of the tourism industry. The rise in fuel prices affects the rates and costs of transportation very severely. The amount of travel expense increases when fuel prices go up. Drawing up a rough calculation shows that a professional driver or a cabby covering 900 km a month driving tourists to destinations from Gangtok to Siliguri could see his monthly fuel bills in June 2018 go up by about Rs 1,250 for a petrol car and Rs 1,000 for a Diesel car, compared to June 2016.  Thus, increasing the fares for commuters of public transports and cabs. Other drivers from other places too take a hit from the recent petrol hike.

Not just the tourists or cabbies but if an individuals’ daily mode of transport is a personal vehicle and just because his monthly bill has gone up by Rs 2,500 does not mean that the individual will switch to using a public mode of transportation (autos, buses or local taxis). The only thing the individual will cut down on is his daily evening drives to a café, malls, pub or a drive around town after work. 

Mr. Norden, President of Sikkim Motor Transport Workers Association gave us a bit of an insight about how the price hikes is affecting the day to day lives of the drivers. The drivers from Singtam are charging old rates for commuters travelling to Siliguri which is Rs 200. Except for a few months ago during which COVID-19 safety precautions was of paramount and hugely emphasised, they were charging Rs 400 per person (to cover up for the empty seats) for transporting five people in a single-vehicle. He gave us an estimated sketch about how a driver from Singtam made a Siliguri and back trip on a single re-fuelling for the sum of Rs 1,000 about 13 ½ litres of fuel which compared to now is only 12 litres approx.  (pre-COVID and price hike times) whereas now, the cabby has to fuel up for Rs 1,500 to make a Siliguri and back trip from Singtam.

That is not all, a hike of fuel affects the prices of essential commodities like fruits and vegetables as well as other products. It increases because it requires transport to distribute it to places. The higher price of fuel means a higher rate of transportation cost by the movers. A higher price will have an inflationary effect in the long run. 

The costs of imports are also affected by the hike in crude oil prices. A rise in oil prices means there is pressure on the external account and the cost of imports rises but deficit increases and the currency i.e. the rupee depreciates. For example, if a person is planning a visit to a foreign country for any purpose whether it’s business or pleasure then he will be affected by the depreciating rate of exchange. The exchange rate we had was resilient but it has been depreciating since the oil prices are rising. Businesses that deals in a foreign currency will also be impacted by the rise in oil prices.

By Druhin Subba

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