Low-income frontline workers of India getting highly affected by rising fuel

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Rizwanudeen, a 37-year old worker who gives food items in the southern Indian city of Chennai, fights to pay his rent and loan installments at the end of every month as he has been highly affected by the higher fuel prices and fewer food orders. Lots of weekly wage-earners like Rizwanudeen who make their living transporting goods or people throughout India have been affected hard by high fuel prices and have risen by a third in the 15 months since the coronavirus first struck the country.

In Mumbai, the average cost of a liter of gasoline is rising above 100 rupees this month, 50 to 70% more than in Bangkok, Hanoi, and Manila. State and federal taxes, which have increased since the Prime Minister came to power in 2014, account for more than 60% of India’s retail fuel price.

The federal government pointed to healthcare costs tied to its continuing battle with COVID-19 and devoted to vast farms and other subsidies. For an Indian who earns the average national wage, a liter of gasoline consumes a quarter of their daily income. Federal government fuel tax revenues are rising 80% to 2.55 trillion rupees over six years ending 2019/20.

With the total federal tax gathered hit by the industrial slowdown by coronavirus-induced lockdowns. New Delhi is unwilling to lower fuel taxes, even after oil prices fell to multi-year lows last year. State authorities are facing rising healthcare costs this year due to the pandemic, and have blamed the federal levies for the raised prices.

Despite the deadlock over who should go first to lower tax rates, the country’s central bank governor Shaktikanta Das confessed last week that rushing fuel prices posed a warning to the broader economy and required cooperative action by central and state governments. And his message came after India’s wholesale price index flowed 10.49% year-on-year in April. Further key cost rises are on the way.

For Selva Murugan, a 35-year old former driver who resides in Chennai for car service Ola, the losses have already been made. Another man says that “I can pay my loan dues when diesel costs about 65 rupees a liter. Then I started to feel the crunch and the time it touched 75 rupees I noticed I had to sell my car,” Murugan said.

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