21% of people are cutting spending on essentials and 14% dipping into savings, according to a survey
Around 8% of consumers, however, consider the current VAT model as fine, while 13% couldn’t say
Mumbai: About 51% of citizens are cutting spending to cope with high fuel prices with 21% cutting spending on essentials and 14% dipping into savings, according to the community platform LocalCircles.
Fuel prices in India have been climbing for the past two weeks. On Sunday however, petrol and diesel prices remained unchanged after 12 days of daily price increase. The price of petrol in Mumbai stood at ₹97 a litre and diesel remained at ₹88 a litre.
In a few states in the country, the price of fuel has crossed ₹100 a litre.
Local Circles said the survey received more than 22,000 responses from citizens located in over 291 districts of the country. 44% of respondents were from tier 1, 29% from tier 2 and 27% of respondents were from tier 3, 4 and rural districts.
79% of citizens want their State Government to take action against rising petrol & diesel prices; want either VAT rate lowered or an absolute value of VAT levied
While the base price for fuel, comprises 36% of the retail petrol price, states value-added tax (VAT) makes up 23%, of the final fuel price. Other factors in the retail price of petrol and diesel include excise duty and road and infrastructure levied by the central government and soon agriculture infrastructure cess, BS-IV premium, marketing cost and margins, dealers commission, etc.
With an objective to understand the pulse of the people on what their respective State Government should be doing to reduce the rising price of petrol and diesel, 32% said “levy an absolute value of VAT instead of a percentage of base price", and 47% said, “reduce the VAT rate itself".
Around 8% of consumers, however, consider the current VAT model as fine, while 13% couldn’t say.
The pandemic, the survey highlighted, has impacted the financial position of citizens, especially for those who lost their jobs, faced salary cuts and delays or a loss in business volumes, with most being the bread-earners of the family.
"The rise in the price of any commodity directly impacts their personal finance or savings and many of them have been cutting their discretionary spending," the survey added.
In the first question the survey tried to understand how people are coping with the rising petrol and diesel prices, 3% “have some extra savings because of lower discretionary spending in the last 12 months", 1% “have some reserve funds due to extra earnings in the las 12 months", 14% are “using savings to pay for it", 16% are “cutting discretionary spending", and 21% said, “cutting spending on essentials and it is painful".
However, with many working from home, for nearly 43% of citizens fuel bill is lower whereas, for 2% the bill is zero.
In May 2020 the government increased excise duty on petrol by ₹10 per litre and diesel by ₹13 per litre in the form of excise duty and road infrastructure cess in a bid to shore up falling revenues to compensate for the fall in demand due to the outbreak.
However, it also put any price revisions on hold for over two months.
The final poll in the survey asked citizens that given the economic recovery and rising GST collection, should the same be reversed? The question received 6,936 responses with 59% saying, that the full amount should be reversed while 30% saying at least 50% amount should be reversed.