SBI study suggests that petrol-diesel prices will drop with GST inclusion
06 Mar 2021 18:09:44
New Delhi, Mar 6: An SBI report highlights that, the pan-India Prices of fuels will drop if the petrol and diesel are brought under the GST regime to Rs 75 and Rs 68 per litre, respectively. The report also adjusted for the rise in consumption if prices of the fuel are reduced and also assumed a 10 per cent growth in petrol and 15 per cent rise in diesel consumption in the fiscal year 2021-22.
The SBI research further highlights that, if we assume the GST rate of 28 par cent, cess of Rs 30 and Rs 20 on a litre of petrol and diesel respectively, crude oil price of USD 60 per barrel and rupee-dollar exchange rate of 73, then it will face a revenue deviation from budget estimates by only Rs 1 lakh crore which accounts for 0.4 per cent of the GDP for the financial year 2021-2022.
The report also said that, the fiscal deficit of India in the FY 2020-2021 could turn out to be lower as compared to the revised estimate of 9.5 per cent of GDP to stand at about 8.7 per cent. So, the report suggests that, govt can lower its borrowings which will help in lowering the yields on its securities. According to the report, the Tax receipts have been bolstered by indirect taxes which also include excise duties but the govt has still about Rs 90 lakh crore which could be spend for two months of the FY 2020-21.
The report suggests that, the central and the state govt should discuss the fuel taxes as they are the major source of tax revenue. The Reserve bank of India had also asked for a 'calibrated and coordinated reduction' in the taxes which the state and central govt levy.