The pump prices of diesel and petrol and the price of gas cylinders hitting new highs is guaranteed to contribute to high inflation. Apart from high taxes, this is because the global price of crude and gas has risen 50 per cent in the past six months and India imports 85 per cent of its crude and about 50 per cent of its gas.
This places the government in a difficult position. Petro products are one of the few items that can bring in tax revenues during a recession. The states and Centre combined collected Rs 6.7 trillion in taxes