At a time diesel sale has witnessed a 1.4% negative growth nationally, Bengal has managed to register a positive 0.3% growth over the last 10 months (April 19 to January 20), indicating better economic activity in the state. Diesel is considered a barometer of economic activity as commercial transport runs entirely on it.
Bengal has also witnessed a double-digit growth of 12.5% in petrol, much above the national figure of 6.7%, as per data available from Indian Oil, the largest oil marketing company in the country with more than 50% market share in all categories. The sale of aviation turbine fuel has also jumped 63% following a cut in taxes by the state at Bagdogra.
Diesel constitutes 65% of the fuel consumption in Bengal with petrol making up the remaining 35%.
Noted economist and ISI professor Abhirup Sarkar explained that diesel consumption is a standard indicator of economic transactions globally. “These numbers can be seen as an indicator of economic activity in Bengal,” he said. IOC executive director and state level co-ordinator of Bengal, Pritish Bharat, also agreed with the view.
State finance minister Amit Mitra had claimed earlier this week that between April and November 2019, Bengal registered an industrial growth of 3.1% compared to 0.6% nationally and a GSDP growth of 10.4%, which was double the national average.
Oil marketing companies say besides better economic growth, Bengal’s diesel sale figures also indicate some ‘arbitrage’ from neighbouring states. Arbitrage is the practice of taking advantage of a price difference between two or more markets.
The price of diesel in Bengal is lower than that in Odisha, Assam and Bihar because of the tax structure. Only Jharkhand is cheaper by 50-60 paisa per litre. “The difference with Odisha is the highest at around Rs 2-2.20 per litre. We have seen that diesel sale in the districts bordering Odisha is very high,” said an official.
He explained that commercial vehicles, which consume huge quantities of diesel, often resort to buying it at a cheaper rate from outlets across the border. “There is hardly any inter-state arbitrage in case of non-commercial consumption and in petrol,” he added.
The VAT on diesel in Bengal is 17% along with a surcharge of 20% whereas the VAT on petrol is 25% along with a surcharge of 30%. The total revenue of the state from petroleum products is around Rs 7,500-7,600 crore per year.
An oil company veteran also pointed out that the number of total vehicles has also gone up nationally and in Bengal over the past year leading to more fuel consumption. “There is overall slowdown in vehicle sales but there is a net addition all the same. The number of vehicle discarded in Bengal is generally 15%-20% of the number added. The number of discarded vehicle may be little more in Delhi,” he added.
Source: Times of India