Amid rising petrol and diesel prices, Reserve Bank of India Governor Shaktikanta Das said it was desirable to bring the fuels under GST. "It is provided for in the Constitution. It is for the GST Council to take a call. It is desirable in the medium or long term, but its implementation may involve some revenue sacrifice initially by the Centre and the states," Das told TOI in an interview.
On bringing down the prices of the fuels, Das said the tax cut has to be a coordinated action by the Centre and the states. "International crude prices have touched $67-68 per barrel, while they were around $70 just before Covid hit. It’s a very dynamic sector and if prices harden further, shale should hit the market and that can have a sobering role," he further added.
The RBI governor's comments echo Finance Minister Nirmala Sitharaman's remarks that a reduction in taxes to make that happen should be a joint call of the central and state governments.
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Petrol and diesel prices are at an all-time high in India. As much as 60 per cent of the retail price of petrol, which has shot above Rs 100-mark in some places in Rajasthan, Madhya Pradesh and Maharashtra and is at an all-time high elsewhere in the country, is made up of central and state taxes. Taxes make up for about 56 per cent of the record high diesel rates.
On the stock markets rally, Das cautioned that investors will have to take an informed decision and warned against being carried away by the frenzy. "The investor will have to take his or her own decision. But as the central bank what I have observed and said is that there is a divergence between the real fundamentals of the economy and certain segments of the financial markets which appear to be moving much ahead of the curve. In the normal course of things, both will adjust to each other. In situations like these, it is essential that every investor takes a very judicious call and not get carried away by short-term trends or developments and particularly small investors need to be very watchful and take their own decisions," he said.
