A deep dive into petrol pricing mechanism
Petroleum products’ prices have never been easier for Indian Governments to deal with. Term “RSP” i.e. Retail selling price of petrol has always been a favorite of opposition parties and headache for consumers. Having said that “RSP” is a function of many variables, some of them are global (which are out of control for our governments) while others are very local and cannot be ruled out. Here it is important to know that petroleum products contribute in a very significant manner to Indian governments, irrespective of the fact whether they are in centre or state. Approximately 30-35% of petrol/diesel prices go to central government while 20-25% of it adds gravity of state treasury. This is pretty normal for governments like ours as we have to run multiple subsidy schemes at any point of the time and we need significant money for that. Imagine, subsidized food, transport, hospital, school, energy and what not, all are sponsored by government. So, it perfectly makes sense as the c