for n r bhanumurthyto ease fuel price burden govt could cut duties and levy shortterm cgtrecent hikes have put domestic petrol prices over the rs 100mark across the country this could have also resulted in an increase in the headline cpi inflation over and above the rbis targeted level of 6 for the second consecutive month with the fuel group inflation hovering in the double digits the wpi inflation which is a little more sensitive to fuel prices due to higher weightage compared to cpi is at double digit for the third consecutive month in fact the price cpi buildup in rural areas is higher than in urban areas thus the recent hikes in fuel prices could have a devastating impact on household budgets more so in the rural areas with sources of incomes as well as savings depleting there have been reports of households selling gold jewellery especially after the second wave of covid19 this increase in fuel prices and subsequent rise in inflation could result in heavy pressure on private consumptionin terms of increase in fuel prices while we are aware that the oil companies read government follow a dynamic fuel pricing system that results in daily calculation of retail prices what is more concerning is the exorbitant rise in the taxes component of these prices the latest data 16th july 2021 for delhi shows that taxes both centre and states are rs 5635 compared to price to dealers at rs 4141 in other words taxes consist of about 56 of the retail prices that are paid by consumers with this the yearonyear fuel inflation is estimated at as high as 263 such large pressure on middleincome budgets during this pandemic could potentially delay the economic recovery processwhile governments both centre and states may be justifying the hike in fuel prices and subsequent tax collections by citing huge pressures on the exchequer could the government have handled this better one of the biggest concerns of the present state of affairs with respect to the macrofiscal policies in india is that they seem to have an asymmetric impact on households and corporates with the leverage shifting from corporates banks to households especially the middle classlet me explain this a little bit with an example while there could be arguments for continuation of low interest rate regimes because of prevailing low interest rates there appears to be risk shifting from corporates even to some extent from banks and governments towards savers indeed the surge in the stock indices and huge premiums on the ipo listings that have been witnessed recently suggests that low interest rate regimes with negative real interest rates could end up protecting the interests of corporates at the cost of an unusually silent middle class going forward as ajit ranade argued recently in an article ipo financing appears to be the only game in town with many unicorns lining up for ipos it would be wise to assess the risk that it is going to build