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Inflation worries force RBI Governor to speak out against high petrol, diesel prices

Emphasising the impact of a hike in fuel price over the manufacturing and transportation of goods, he urged for coordinated action to curb prices.

As the prices of petrol and diesel continued to burn holes in citizens’ pockets, the Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday emphasised the need for Centre and state governments to co-ordinate and reduce levies on petrol and diesel.

He said while it was understood that the governments have their revenue pressures and require money to enable the country to come out of the Covid-19 stress, high retail fuel prices will impact the cost of other products.

The RBI governor said diesel and petrol prices inflate costs across a range of activities. Emphasising the impact of a hike in fuel price over the manufacturing and transportation of goods, he urged for coordinated action to curb prices.

Earlier on Monday, the RBI governor during the minutes for Monetary Policy Committee meeting said that calibrated unwinding of taxes is necessary to reduce price pressures in the economy. The CPI inflation excluding food and fuel remained elevated at 5.5 per cent in December, due to inflationary impact of rising crude oil prices and high indirect tax rates on petrol and diesel, and pick-up in inflation of key goods and services, particularly in transport and health categories, Das noted in the MPC minutes.

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The price rally took petrol prices beyond Rs 100 per litre in several cities, driving diesel closer to Rs 90 a litre in many others. On Thursday, petrol price in Delhi stood at Rs 90.58 per litre. In India, the fuel prices witnessed a steep climb over the past week, with petrol price breaching the Rs 100 mark and diesel costing around Rs 90 in many cities. Though states like Meghalaya, Rajasthan, Assam, and poll-bound West Bengal have reduced taxes on price-sensitive fuel, the Central government has refused to cut excise duty despite the unprecedented rise in fuel prices over the past two months.

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