UP Minister Claims 95% Indians Don't Need Petrol, But Fuel Prices Affect All
UP Sports Minister Upendra Tiwari didn't factor in the fact that fuel price rise increases inflation, which then dents all sections of Indian economy
Uttar Pradesh's Minister of State for Sports, Youth Welfare, and Panchayati Raj Upendra Tiwari, speaking to the media at Jalaun in UP on October 21, 2021, claimed that 95% Indians do not need petrol and only a handful use four-wheeled vehicles.
When asked about the consistent rise in fuel prices, which had increased for the second day in a row on October 21, Tiwari was quoted by NDTV as saying, "As for petrol and diesel prices, there are now a handful of people who use four-wheelers and need petrol. Currently, 95% people in the society do not need petrol."
At the time of Tiwari's statement, petrol prices in Lucknow had reached Rs 103.18 per litre and diesel cost Rs 95.72.
Impact of Rising Fuel Prices
What's not factored in Tiwari's claim of "95% Indians not needing petrol" is the impact of rising fuel prices on all sectors that either directly or indirectly rely on fuel. Rising fuel prices feed into food inflation, and affect farmer's income.
"Efforts to contain cost-push pressures through a calibrated reversal of the indirect taxes on fuel could contribute to a more sustained lowering of inflation and an anchoring of inflation expectations," said RBI Governor Shaktikanta Das on October 8, 2021 in an effort to nudge the government to cut fuel tax.
In a research paper titled 'Reforming fossil fuel prices in India: Dilemma of a developing economy', Mukesh Anand, Assistant Professor at National Institute of Public Finance and Policy, found that any change in fuel prices would affect cost of farming and food prices because farmers use diesel to run tractors, harvesters, combines, generators, and water pumps and this could also offset any price hikes in the Minimum Support Prices (MSPs) of crops that farmers could benefit from.
According to an assessment conducted by Petrol Pump Dealers Association of Punjab (PPDAP), there was "demand destruction" and sales volume of petrol reduced by about 20%-30%, thus directly affecting agriculture in the state, IndiaSpend reported. "The farmers who have a budget of, say, around Rs 1 lakh [to be put into] input costs, their budget hasn't gone up even when the fuel prices have. So [we are seeing a trend] where the farmers are buying less fuel," Monty Sehgal, spokesperson of PPDAP, told IndiaSpend.
Farmers had also protested the rising fuel prices on July 8, 2021. In fact, rising fuel prices have also adversely impacted households' discretionary spending owing to rising prices of commodities and dented business margins. In a July 2021 report by State Bank of India, the bank highlighted that every 10% increase in petrol pump prices (in Mumbai) will lead to a 50 basis point (bps) increase in Consumer Price Index (CPI). 1 bps is 1/100th of a per cent.
"Rising crude oil prices will eventually seep into retail fuel prices, adding to inflationary pressure," Aditi Nayar, Chief Economist, ICRA, told Deccan Herald.
More than half the price consumers pay per litre of fuel is tax, in which the major share goes to the central government. For example, every litre of petrol purchased at an Indian Oil Corporation pump in Delhi, 57% of the payment goes to tax (34% to the central government and 23% to the state government); 39% is for the fuel itself; and 4% is the dealer's commission, FactChecker reported in June 2021. Truckers increased freight rates in July 2020 owing to increase in diesel prices and that unnerved the industry.
Rising fuel prices also lead to higher input and operating costs for MSMEs. "Even as the formal sector profits grow, employment and consumer surveys suggest significant overall job losses and decline in wages. This suggests that India's small businesses, which employ 85% of India's workforce, are under significant distress," wrote Observatory Group's Ananth Narayan in his research. More than half of the MSMEs are in rural India, highlighted the Department of Revenue's report on GST Initiatives for MSMEs. This shows that rising fuel prices put an added burden on the already-distressed MSMEs.
Vehicles on Indian Roads
According to Union Ministry of Road Transport and Highways' (MoRTH) latest yearbook, till March 31, 2019, 295.772 million vehicles had been registered in the country. Of these, 269.88 million vehicles are non-transport vehicles, which include 221.27 million two-wheelers, 32.42 million cars, 2.9 million Jeeps, 8.82 million tractors, 2.23 million trailers, 0.55 million Omni buses, and 1.43 million other vehicles. When it comes to transport vehicles, the yearbook shows that till March 31, 2019, there were 25.89 million transport vehicles registered in the country. These include 6.68 light motor vehicles (LMVs), 1.47 million buses, 5.33 million trucks & lorries, 3.11 million taxis, and the remaining include motorcycles on hire, multiaxled/articulated vehicles, LMVs for passengers, and others.
There were 26.3 million and 21.5 million motor vehicles sold in the country in 2018-19 and 2019-20, respectively, according to the yearbook. In fact, between 2009-10 and 2019-20, around 240 million vehicles were sold in India, with an average yearly sale of over 21.818 million. Since this also includes 34.8 million vehicles that were exported, the number of vehicles sold domestically stood at 205.2 million.
While MoRTH doesn't publish fuel-wise data on registered vehicles, the yearbook highlights that there were 225 registered motor vehicles per 1000 people in the country in 2019 and that 205.84 million driver's licences had been issued till March 31, 2019 in the country.
But there are two data gaps here: 1. Since one person can register multiple vehicles, there's no data on how many people actually have vehicles, and 2. There's no record of vehicles scrapped through the Registered Vehicles Scrapping Facility (RVSF) established through the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021. In a reply in the Lok Sabha on July 29, 2021, Union Minister of Road Transport and Highways Nitin Gadkari said that since the "transactions between RVSF and vehicle owners are market based and not determined by the government… the ministry does not have any data on this".
Tiwari also claimed that, "You take figures from before 2014 and now. The per capita income has more than doubled after Modiji's and Yogiji's governments were formed."
Fact: If Tiwari was referring to the per capita income of the entire country, then his claim is false. India's GDP per capita was $1,449.61 in 2013 and rose to $1900.707 in 2020, according to the World Bank. This shows the GDP is $998.5 less than the double of the GDP in 2013. In fact, India's GDP per capita has fallen by around $200 — from $2100.751 in 2019 to $1900.707 in 2020.Yogi Adityanath became the chief minister of Uttar Pradesh in March, 2017. The per capita net state domestic product (NSDP) of UP, according to the data provided by the Ministry of Statistics and Programme Implementation, in 2016-17 was Rs 52,671 at current prices. The per capita NSDP of UP in 2020-21 was Rs 65,431 at current prices. So, the per capita NSDP has not doubled since Yogi came to power.