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Modi’s Fuel-Tax Hikes Are Putting Brakes on India’s Recovery

  • Government has raised diesel, gasoline levies twice this year
  • Taxes now make up almost two-thirds of fuel costs in India
Operations at a Hindustan Petroleum Gas Station As Crude Extends Slide
Photographer: T. Narayan/Bloomberg
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Dilip Lamba, who owns a transport company in Jodhpur in western India, has had more than three-quarters of his fleet of 50 trucks idling for months. Dharampal Nambardar, a farmer who grows wheat and mustard seed in Haryana state, is worried he might not make any profit this year.

The main source of their anxiety is not Covid-19, however, but rather a surge in fuel prices. The central government has hiked import and excise taxes twice this year even as it imposed the world’s biggest coronavirus lockdown. Retail prices for diesel -- the lifeblood of India’s economy -- in the capital New Delhi have jumped 30% since the end of April, while gasoline has risen 16%.