The government has justified high level of taxation on auto fuels suggesting that revenue from the petroleum sector is important for running various developmental schemes but has refused to acknowledge the role played by higher prices of petrol and diesel in fuelling inflationary pressure on the economy.
Reacting to a question on the impact of rising fuel prices on country's economic recovery from the Covid-19 pandemic in the Lok Sabha, minister of petroleum and natural gas Hardeep Singh Puri said that revenue generated by taxation (on petroleum products) is used in various developmental schemes of the Government like Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Ujjawala Yojana (PMUY), Ayushman Bharat, Pradhan Mantri Garib Kalyan Yojana (PMGKY) and also to provide relief to the poor during the pandemic by schemes like Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) under which free ration was provided to 80 crore beneficiaries during April, 2020 to November 2020 and May-June 2021, free vaccination against Covid-19 etc.
Regarding higher prices of fuel raising inflationary pressure on the economy, the minister in his reply said that the weightage of petrol, diesel and LPG in the WPI index is 1.60 percent, 3.10 percent and 0.64 percent indicating that petroleum products may not be responsible rising prices in other categories. Taxes account for a lion's share of the current retail price of petrol and diesel.
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