Have you ever wondered why fuel prices in Assam are consistently higher compared to Manipur? The disparity in fuel prices between these two neighbouring states can be perplexing. In this article, we will delve into the factors that contribute to this difference, understanding the dynamics of fuel pricing and its impact on your daily life. So, let's explore the reasons behind the higher fuel prices in Assam and why you end up paying more at the pump.
Factors Affecting Fuel Prices:
While there are several factors that affect fuel prices directly or indirectly, we will look into the major ones here.
Transportation Costs and Logistics
One of the primary reasons for the disparity in fuel prices between Assam and Manipur lies in transportation costs and logistics. Assam is located farther away from the major oil refineries and depots, leading to higher transportation expenses to bring fuel to the region. This increased distance results in additional logistics costs, which ultimately get passed on to the consumers in the form of higher fuel prices. On the other hand, the logistic charge to supply fuel in Manipur is low, leading to a cheaper price.
Value Added Tax (VAT) Rates:
Value Added Tax (VAT) plays a crucial role in determining fuel prices across states. In Assam, the current VAT rate on petrol stands at 32.63%, while for diesel, it is 27.93%. Manipur, however, imposes a lower VAT of 20% on both petrol and diesel. The significant variance in VAT rates directly impacts the retail prices of fuel in Assam and Manipur.
Government policies greatly influence fuel prices. Assam follows the Automatic Price Mechanism (APM), linking fuel prices to international crude oil rates. Manipur, on the other hand, implements the Oil Palm Policy, which subsidizes diesel used in the transportation of palm oil and its products. This subsidy scheme helps maintain relatively lower fuel prices in Manipur.
Supply and Demand Dynamics:
Differences in the demand-supply dynamics between Assam and Manipur influence fuel prices. Assam, being more densely populated and boasting a higher concentration of industries and commercial activities, experiences greater fuel demand. The increased demand places upward pressure on fuel prices as suppliers strive to meet the consumption needs of the region. Manipur, with a comparatively lower population and industrial base, witnesses relatively lower fuel demand, leading to lower prices.
Economic disparities between Assam and Manipur contribute to the fuel price variations. Assam has a stronger and more developed economy, characterized by higher income levels and greater economic activities. This results in increased fuel demand and purchasing power, leading to higher fuel prices. Conversely, Manipur's relatively lower economic development and lower fuel demand contribute to comparatively lower fuel prices.
Tax Structure and Revenue Generation:
The tax structure adopted by state governments plays a significant role in fuel pricing. In addition to VAT, various other taxes, such as Central Excise Duty and State Excise Duty, impact the final retail price of fuel. Assam may have higher tax burdens compared to Manipur, resulting in higher fuel prices. These taxes are often utilized for infrastructure development, developmental projects, and revenue generation for the state.
Understanding the technical aspects behind the fuel price disparity between Assam and Manipur reveals the complex interplay of factors influencing the pricing mechanisms. VAT rates, government policies, infrastructure challenges, supply and demand dynamics, economic disparities, and tax structures all contribute to the observed variations. By leveraging this knowledge, individuals can make informed decisions regarding fuel consumption. While the higher fuel prices in Assam may seem burdensome, it's essential to understand the underlying factors shaping these costs. To stay updated on fuel prices and find the best deals, consider using the Park+ app. With Park+, you can conveniently track fuel prices, locate nearby fuel stations, and manage your transportation needs. Download the Park+ app today to simplify your journey.