There was a recent outcry from the public after the fuel price in Andhra Pradesh did not go down even though the Centre did reduce the prices. There was a constant urge from the petroleum union in Andhra Pradesh to lower the VAT taxes.
With such a confusing state of affairs in Andhra Pradesh, the fuel price in Nagaland saw quite a drop.
Andhra Pradesh is going through a crisis, and the people are fuming because of the high prices of fuel that they have to pay. There are a lot of factors that contribute to the high price of fuel in Andhra Pradesh. Let's take a look at the reason for this disparity.
Major Reasons Behind the High Fuel Price In Andhra Pradesh
There are a lot of factors when it comes to why the fuel price in Andhra Pradesh is more than the fuel price in Nagaland. Some of these are:
1. Dependence on Imported Fuel
One of the most important factors that play a crucial role in deciding the fuel price in Andhra Pradesh is whether they depend on imported fuel.
In the current scenario, Andhra Pradesh depends on imported fuel quite a bit, so they must pay a higher price. After worldwide inflation, crude oil prices are quite high, so imported fuel is costlier.
On the other hand, Nagaland has access to local fuel, so they are not affected much by global fluctuations.
If Andhra Pradesh can reduce its dependency on imported fuel, then there is a high chance that the fuel price in Andhra Pradesh will go down.
2. State Budget and Financial Restraints
The financial condition of every state is different. Andhra Pradesh is a big state; hence, the population is much more than that of Nagaland, which is a small state. Consequently, the state budget does not allow a lower fuel price in Andhra Pradesh, as in the case of Nagaland. The financial condition in Andhra Pradesh has seen quite a low in the past couple of years and has directly impacted fuel prices.
3. Lack of Competitive Forces in Andhra Pradesh
If the competition increases, the fuel price in Andhra Pradesh will be much lower than it is now. However, because there are only a few good and trusted fuel options in Andhra Pradesh, the fuel prices are expensive.
The market in Nagaland is very different, and there is much stronger competition because the state is small. There are more options and fewer people. Hence the prices are competitive.
4. Government Subsidies
The government subsidy is quite an important factor in formulating the fuel price in Andhra Pradesh. As previously discussed, the Government of Andhra Pradesh is yet to lower the VAT. The state government has been collecting a VAT of Rs. 26.39 per litre and an additional 31% on petrol, automatically impacting fuel prices.
If the state's financial situation gets a little better, then there are chances that the government will grant more subsidies to reduce prices.
However, in Nagaland, the government has introduced a lot of promising subsidies, specifically on fuel, to minimise the cost as much as possible. Nagaland levies a tax of Rs. 16.13 per litre. This is a major reason why there are stark differences between Nagaland and Andhra Pradesh fuel prices.
And finally, maintenance and keeping the infrastructure working at its optimum level are important in any state.
The system of the pipeline, refining, and distribution of petroleum should be up to standard. Andhra Pradesh requires some investment in the infrastructure's upkeep when compared with Nagaland.
As a small state, Nagaland does not face as many challenges as Andhra Pradesh for fuel management and distribution channels. This is why the fuel price in Andhra Pradesh is quite higher than in Nagaland.
Andhra Pradesh is a highly populous state with limited fuel resources, which is why it is more expensive than Nagaland. If you want to get more updates about the fuel price in Andhra Pradesh or the fuel price in Nagaland, then you can download the Park+ app. The app is extremely easy to use and will give you all the necessary information with just one click.