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Hardeep Puri: 'Petrol won't come under GST, fuel prices may come down if...'

Union Petroleum Minister Hardeep Singh Puri has ruled out the inclusion of petrol under GST, citing its impact on state revenues and the ongoing fluid economic situation. He, however, indicated that fuel prices might decrease if global crude oil prices stabilise and international turbulence subsides.  
Currently, international crude oil prices hover around $72-$73 per barrel. "If prices stay within this range or drop further, there's scope for reduction in retail prices," Puri said in a podcast - Top Angle. However, he said, a rise to $80 per barrel would leave no room for relief. 

When asked whether the inclusion of petrol under the GST will bring down the prices, the minister said: "Petrol is not going to come under GST anytime soon because the current situation is quite fluid. Petrol cannot be brought under GST as it generates significant revenue for the states, and the states will never agree to it."
  
India, which relies on imports for over 85% of its crude oil needs, has managed to keep petrol and diesel prices stable in recent years. Puri explained that the price of crude oil depends on several factors: the cost of a barrel internationally, insurance, freight charges, and the dollar exchange rate. 
While international crude prices have indeed fallen, he said, the dollar exchange rate and insurance and freight charges have risen. Despite these challenges, India is one of the few countries where petrol and diesel prices have decreased over the last three years, the minister added. 

Puri said that India's petrol prices are significantly lower compared to neighbouring countries like Sri Lanka, Bangladesh, and Pakistan. Even globally, he said, India's performance in absolute terms has been better, with prices either stabilising or declining. "Within India, petrol and diesel prices in BJP-ruled states are Rs 10 cheaper than in non-BJP-ruled states. The real question should be when prices in non-BJP-ruled states will come down?"

The minister said that Prime Minister Narendra Modi is dedicated to ensuring that economically weaker sections are not burdened. He suggested that while oil marketing companies have made some profits in petrol, they have suffered losses in gas. He said gas cylinders priced at Rs 1,200 are now available for Rs 500 under the Ujjwala scheme and these subsidies have resulted in significant losses for oil marketing companies, amounting to Rs 40,000 crore in the past year alone.  
Puri said that currently, more oil is available in the Western Hemisphere. Brazil produces 3 million barrels per day, and according to their findings, an additional 400,000 barrels will come, he added. "More oil is also coming from places like Canada, Suriname, Guyana, and the United States."

"If the oil supply increases in these areas, I believe the cost of extraction can vary from $45 per barrel to $80. However, there are several countries that have increased their costs and will want prices to stay above $80-$85. But it will be difficult for them because if there is more oil, someone else will provide it. If the supply continues to increase, I can confidently say that by the end of 2025, natural gas prices will come down considerably," he added. 

The minister said that India's strategic shift in sourcing crude oil also played a crucial role in stabilising fuel prices. Following the Russia-Ukraine war, India increased oil imports from Russia, which now accounts for 38% of its crude supply, up from 0.2% in February 2022. "The move helped control global inflation and addressed supply shortages," Puri stated, adding that Western nations, including the US, supported India's decision to purchase discounted Russian oil.

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