“It’s not just passengers who are using cars and scooters. High petrol and diesel prices also have an impact on the cost of manufacturing, transportation, and other aspects,” said Das, while speaking at an event organised by the Bombay Chamber of Commerce and Industry.
Pointing out that there were taxes imposed by both the Centre and states, Das said, “There is need for coordinated and calibrated reduction of taxes.” He said that while the government did need to raise money as it had to spend higher sums to tackle the Covid stress, action was needed to bring down prices as fuel rates have an impact on inflation through cost of manufacturing as well.
Earlier this week, the RBI had released the minutes of the monetary policy committee (MPC), which revealed that its members were concerned over the rising fuel prices. This at a time when petrol prices are inching toward the Rs 100 mark in various states.
“Proactive supply side measures, particularly in enabling a calibrated unwinding of high indirect taxes on petrol and diesel — in a coordinated manner by Centre and states — are critical to contain further build-up of cost-pressures in the economy,” Das had said in the minutes of the MPC.
Das pointed out that during the early days of the pandemic, lower crude oil prices and weak demand due to the Covid-related lockdown squeezed India’s fuel import bill by 42.5% in April-January 2020-21.
In his speech, Das said that even though merchandise trade has shown incipient signs of revival since end-2020, recovery in services trade is yet to gain traction as subdued cross-border tourism and travel restrictions continue to weigh on the overall performance of the sector.
“The manufacturing sector is spearheading the growth recovery as many contact-intensive services sub-sectors are severely affected by the crisis,” said Das. He said that government measures to promote manufacturing along with reforms in the labour market can go a long way in propelling growth to an elevated trajectory.