India is a diverse country. Just like everything else, it has different fuel prices for different states. The growing demand for fuel in India is also accelerating its price. Recently, fuel prices in different states are rising more than expected. Andhra Pradesh is one such state.
The fuel price in Andhra Pradesh is increasing daily, currently at INR 111.65. But are you wondering why it is higher than other states in India, such as Gujarat? It is natural as the fuel price in Gujarat stands at INR 96.88.
The difference is quite big. But, before you take it as a partiality, you must know various reasons govern the fuel prices in different states of India. The same is true for Gujarat and Andhra Pradesh. So let us dig deeper and find out why the fuel price in Andhra Pradesh is high compared to Gujarat.
Fuel price differs from place to place for various reasons. Some of the common ones are stated below.
Central and state governments impose fuel taxes like any other basic commodity. The tax rates are different for different states. Besides the Excise duty imposed by the central government, the state government imposes sales tax, cess, and additional sales tax on fuel.
The state government of Andhra Pradesh imposes higher taxes on fuel than the state government of Gujarat. Moreover, the excise duty tax is different for different states. The total of all taxes comes out to be higher for Andhra Pradesh, thus justifying the rising fuel prices.
VAT or Value Added Tax is also important when comparing the fuel prices in Andhra Pradesh and Gujarat. The state government of every state imposes VAT on fuel as a part of goods and services. Just like other taxes, VAT is also different for different states.
VAT imposed by the state government of Andhra Pradesh is higher than that of Gujarat, thus adding to the fuel prices. In recent years, the VAT rate in Andhra Pradesh is 31.40% and 22.25% on petrol and diesel, respectively. On the other hand, it is 28.96% and 22.81%, respectively, in Gujarat. Hence, the fuel price in Andhra Pradesh is higher than in Gujarat.
Besides taxes, other factors affect the fuel price in a state. The geographical location also plays a major role. The fuel cost depends on how easily the state can import crude oil.
You must know the coastal states' access to more crude oil ports. As a coastal state, Gujarat has the upper hand in this case. Hence, it has more supply of crude oil than Andhra Pradesh, an inland state.
Hence, the lack of crude oil ports in Andhra Pradesh leads to rising fuel prices in the state.
Demographics, or a state's population, also has a louder say when deciding fuel prices. The higher the population, the more the demand for fuel, and the higher the fuel prices.
Andhra Pradesh is a highly populated state that faces a higher demand for fuel and, thus, high fuel prices. On the other hand, the population of Gujarat is less than Andhra Pradesh, thus enjoying a lower price of fuel.
The competition depends on the number of petrol pumps in a state. A greater number of petrol pumps indicates less competition and a lower fuel price.
Since Andhra Pradesh has fewer petrol pumps than Gujarat, it faces more competition. So, this increases the fuel price in Andhra Pradesh.
The rising fuel prices in Andhra Pradesh have created havoc among people. Being lower than the fuel price in Gujarat is another point of curiosity. However, there are many valid reasons for such a trend, as you can notice from the several factors mentioned. The taxes, geographical location, demographics, competition, etc., are all in favour of Gujarat, thus keeping the fuel prices lower than in Andhra Pradesh.
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