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Govt did right by hiking excise duty on petrol and diesel, for now 🙏🙏 No offence to anybody, but this will only make sense to ones who weigh context over emotions. Those who read my work regularly would know, I am no fan of the present Govt. So, before you brand me a Bhakt already, hear me out. .. The Govt of India had deregulated petrol and diesel prices, and until Covid happened, as global crude prices went up and down, every fortnight, the retail prices at pumps also went up and down. But, Covid changed things. - A massive chunk of the economy closed, and Govt’s spending went through the roof with welfare spends skyrocketing - Plus, the state Govts, especially those with terrible financial position - Himachal, Punjab, and many in the East - were provided with funds For that, the Govt had no option but to borrow over Rs 10 lakh crore! .. Outcome? - From 4.5% of the GDP in FY14, the Modi Govt had brught down the fiscal deficit to 3.4% (much done by Arun Jaitley) - But, within a year of Covid, it shot to a mighty big 9.2% of the GDP! COVID has gone away, but those loans are yet to be fully paid back. And for that the Govt needs more money, than it would have otherwise needed to run the country and meet its needs if TODAY. Where is that going to come from? Only three major sources. 1- Sell assets - land, PSUs etc - Political hot land, too much noise, and too little outcome 2- Raise income/corporate taxes on people - Govt has only kept bringing the already MUCH HIGH income/corporate tax down, which remain high in my eyes And that leaves just one avenue. .. Raise other taxes. Govt found an opportunity to do that when crude oil prices went down in between. How? By keeping pump prices same, while raising the tax component of them. That helped Govt find the extra money needed to reduce its loan pile. Outcome? The fiscal deficit has already fallen from 9.2% to 4.8% in FY25. Thus, even though we have not directly benefited in form of lower petrol prices, economy has, IN A BIG WAY. - But fisc deficit remains higher than 4.5% of FY14, which was itself crazy high - Thus, it needs to be brought much below to pre-Covid 3.4% levels For that, Govt needs to find EVEN MORE money to reduce its borrowings. And everytime international crude rates fall, it gives the Govt that opportunity without raising income or corporate taxes, or selling the assets. .. I drive a lot, so does my Maa. We buy a lot of petrol. It hit my pockets, too. So, please don’t tell me that I don’t get the hit. Demand that the Govt reduce freebies and use the money to pay back loans taken during COVID-19 at an accelerated pace. That will help bring down petrol and diesel prices sooner. Nothing else will.