Rising fuel prices in India has led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control. The rise in petrol price is mainly due to the global price of crude going up. Governments have acted differently in various countries on fuel pricing. Further, a stronger dollar has added to the cost of crude oil which is refined by the OMCs. Just how high are the prices in India compared to other countries?
In the table below we have juxtaposed petrol prices as of May 9 in various countries with the per capital income. The latter would indicate further whether citizens get impacted more or less due to these high prices.
For a set of 106 countries for which data is available, the price in India at $ 1.35/litre is 42nd in rank. Hence there are over 50 countries where the price is higher. This should provide some comfort that in absolute terms India is not an outlier. The median price was around $ 1.22/litre.
The table provides prices for some major economies where Indian price can be meaningfully compared. Fuel prices in India are at par with those in Australia, Turkey, and South Korea. However, the price is very high in case of Hong Kong, Finland, Germany, Italy, Netherlands, Greece, France, Portugal and Norway where it above $ 2/litre.
Amongst comparable countries (per capita wise), prices are much lower in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, Venezuela. Countries that are major oil producers have much lower prices.
India’s petrol price does not now look too much out of place. However, when juxtaposed with the per capita income, it can be seen that wherever prices are higher, the per capita income is much higher than in India. Therefore, the economic pain caused is much higher for countries with low per capita income as its direct and indirect effect on inflation is higher which in turn impacts the lower income groups the most.
In the table, Philippines has comparable petrol price but has a per capita income higher than India by over 50%. Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower price of petrol and hence are impacted less than India.
Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people.
Related: Inflation impact on the salaried class, economy, and investors
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