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Over the last few days, the retail prices of petrol and diesel have touched an all-time high.  In Delhi, petrol was selling at 74.6/litre on April 25, 2018, while diesel was at 66/litre.

Petroleum products are used as raw materials in various sectors and industries such as transport and petrochemicals.  These products may also be used in factories to operate machinery or generators.  Any fluctuation in the price of petrol and diesel impacts the production and transport costs of various items.  When compared to other neighbouring countries, India has the highest prices for petrol and diesel.

Note: Prices as on April 1, 2018. Prices for India pertain to Delhi. Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.

Note: Prices as on April 1, 2018. Prices for India pertain to Delhi.
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.

How is the price of petrol and diesel fixed?

Historically, the price of petrol and diesel in India was regulated, i.e. the government was involved in the deciding the retail price.  The government deregulated the pricing of petrol in 2010 and diesel in 2014.  This allowed oil marketing companies to determine the price of these products, and revise them every fortnight.

Starting June 16, 2017, prices for petrol and diesel are revised on a daily basis.  This was done to with the idea that daily revision will reduce the volatility in retail prices, and protect the consumer against sharp fluctuations.  The break-up of retail prices of petrol and diesel in Delhi on April 25, 2018 can be found below.  As seen in the table, over 50% of the retail price of petrol comprises central and states taxes and the dealer’s commission.  In case of diesel, this amount is close to 40%.

Table 1: Break-up of petrol and diesel prices in Delhi (on April 25, 2018)

Component

Petrol

Diesel

Rs/litre % of retail price Rs/litre

% of retail price

Price Charged to Dealers 35.7 48% 38.4 58%
Excise Duty (levied by centre) 19.5 26% 15.3 23%
Dealer Commission 3.6 5% 2.5 4%
VAT (levied by state) 15.9 21% 9.7 15%
Retail Price 74.6 100% 65.9 100%
Source: Price Build-up of Petrol and Diesel at Delhi effective April 25, 2018; Indian Oil Corporation Limited.

 

Does India produce enough petroleum to support domestic consumption?

India imports 84% of the petroleum products consumed in the country.  This implies that any change in the global prices of crude oil has a significant impact on the domestic price of petroleum products.  In 2000-01, net import of petroleum products constituted 75% of the total consumption in the country.  This increased to 95% in 2016-17.  The figure below shows the amount of petroleum products consumed in the country, and the share of imports.

Note: Production is the difference between the total consumption in the country and the net imports. Sources: Petroleum Planning and Analysis Cell; PRS.

Note: Production is the difference between the total consumption in the country and the net imports.
Sources: Petroleum Planning and Analysis Cell; PRS.

What has been the global trend in crude oil prices? How has this impacted prices in India?

Over the last five years, the global price of crude oil (Indian basket) has come down from USD 110 in January 2013 to USD 64 in March 2018, having touched a low of USD 28 in January 2016.

While there has been a 42% drop in the price of global crude over this five-period, the retail price of petrol in India has increased by 8%.  During this period, the retail price of diesel increased by 33%.  The two figures below show the trend in prices of global crude oil and retail price of petrol and diesel in India, over the last five years.

Petrol price

Diesel price

 

Note: Subsidy indicated in the graphs is notional.  While calculating the subsidy amount, other factors such as cost of domestic inputs will also have to be accounted.  Global Crude Oil Price is for the Indian basket.  Figures reflect average monthly retail price of petrol and diesel in Delhi.
Sources: Petroleum Planning and Analysis Cell; Indian Oil Corporation Limited; PRS.

 

How has the excise duty on petrol and diesel changed over the last few years?

Under the Constitution, the central government has the powers to tax the production of petroleum products, while states have the power to tax their sale.  Petroleum has been kept outside the purview of the Goods and Services Tax (GST), till the GST Council decides.

Over the years, the central government has used taxes to prevent sharp fluctuations in the retail price of diesel and petrol.  In the past, when global crude oil prices have increased, duties have been cut.  Since 2014, as global crude oil prices declined, excise duties have been increased.

Sources: Petroleum Planning and Analysis Cell; PRS.

Sources: Petroleum Planning and Analysis Cell; PRS.

 

As a consequence of the increase in duties, the central government’s revenue from excise on petrol and diesel increased annually at a rate of 46% between 2013-14 and 2016-17.  During the same period, the total sales tax collections of states (from petrol and diesel) increased annually by 9%.  The figure below shows the trend in overall collections of the central and state governments from petroleum (including receipts from taxes, royalties, and dividends).

 

Notes: Data includes tax collections (from cesses, royalties, customs duty, central excise duty, state sales tax, octroi, and entry tax, among others), dividends paid to the government, and profit on oil exploration. Data sources: Petroleum and Planning Analysis Cell; Central Board of Excise and Customs; Indian Oil Corporation Limited; PRS.

Notes: Data includes tax collections (from cesses, royalties, customs duty, central excise duty, state sales tax, octroi, and entry tax, among others), dividends paid to the government, and profit on oil exploration.
Data sources: Petroleum and Planning Analysis Cell; Central Board of Excise and Customs; Indian Oil Corporation Limited; PRS.

Today, the National Medical Commission Bill, 2019 was passed by Lok Sabha.  It seeks to regulate medical education and practice in India.  In 2017, a similar Bill had been introduced in Lok Sabha.  It was examined by the Standing Committee on Health and Family Welfare, which recommended several changes to the Bill.  However, the 2017 Bill lapsed with the dissolution of the 16th Lok Sabha.  In this post, we analyse the 2019 Bill.

How is medical education and practice regulated currently?

The Medical Council of India (MCI) is responsible for regulating medical education and practice.  Over the years, there have been several issues with the functioning of the MCI with respect to its regulatory role, composition, allegations of corruption, and lack of accountability.  For example, MCI is an elected body where its members are elected by medical practitioners themselves, i.e., the regulator is elected by the regulated.  Experts have recommended nomination based constitution of the MCI instead of election, and separating the regulation of medical education and medical practice.  They suggested that legislative changes should be brought in to overhaul the functioning of the MCI.

To meet this objective, the Bill repeals the Indian Medical Council Act, 1956 and dissolves the current MCI.

The 2019 Bill sets up the National Medical Commission (NMC) as an umbrella regulatory body with certain other bodies under it.  The NMC will subsume the MCI and will regulate medical education and practice in India.  Under the Bill, states will establish their respective State Medical Councils within three years.  These Councils will have a role similar to the NMC, at the state level.

Functions of the NMC include: (i) laying down policies for regulating medical institutions and medical professionals, (ii) assessing the requirements of human resources and infrastructure in healthcare, (iii) ensuring compliance by the State Medical Councils with the regulations made under the Bill, and (iv) framing guidelines for determination of fee for up to 50% of the seats in the private medical institutions.

Who will be a part of the NMC?

The Bill replaces the MCI with the NMC, whose members will be nominated.  The NMC will consist of 25 members, including: (i) Director Generals of the Directorate General of Health Services and the Indian Council of Medical Research, (ii) Director of any of the AIIMS, (iii) five members (part-time) to be elected by the registered medical practitioners, and (iv) six members appointed on rotational basis from amongst the nominees of the states in the Medical Advisory Council.

Of these 25 members, at least 15 (60%) are medical practitioners.  The MCI has been noted to be non-diverse and consists mostly of doctors who look out for their own self-interest over public interest.   In order to reduce the monopoly of doctors, it has been recommended by experts that the MCI should include diverse stakeholders such as public health experts, social scientists, and health economists.  For example, in the United Kingdom, the General Medical Council which is responsible for regulating medical education and practice consists of 12 medical practitioners and 12 lay members (such as community health members, administrators from local government).

What are the regulatory bodies being set up under the NMC?

The Bill sets up four autonomous boards under the supervision of the NMC.  Each board will consist of a President and four members (of which two members will be part-time), appointed by the central government (on the recommendation of a search committee).  These bodies are:

  • The Under-Graduate Medical Education Board (UGMEB) and the Post-Graduate Medical Education Board (PGMEB): These two bodies will be responsible for formulating standards, curriculum, guidelines for medical education, and granting recognition to medical qualifications at the under-graduate and post-graduate levels respectively.
  • The Medical Assessment and Rating Board: The Board will have the power to levy monetary penalties on institutions which fail to maintain the minimum standards as laid down by the UGMEB and the PGMEB.  It will also grant permissions for establishing new medical colleges, starting postgraduate courses, and increasing the number of seats in a medical college.
  • The Ethics and Medical Registration Board: This Board will maintain a National Register of all the licensed medical practitioners in the country, and also regulate professional and medical conduct.  Only those included in the Register will be allowed to practice as doctors.  The Board will also maintain a register of all licensed community health providers in the country.

How is the Bill changing the eligibility guidelines for doctors to practice medicine?

There will be a uniform National Eligibility-cum-Entrance Test for admission to under-graduate and post-graduate super-speciality medical education in all medical institutions regulated under the Bill.  Further, the Bill introduces a common final year undergraduate examination called the National Exit Test for students graduating from medical institutions to obtain the license for practice.  This test will also serve as the basis for admission into post-graduate courses at medical institutions under this Bill.  Foreign medical practitioners may be permitted temporary registration to practice in India.

However, the Bill does not specify the validity period of this license to practice.  In other countries such as the United Kingdom and Australia, a license to practice needs to be periodically renewed.  For example, in the UK the license has to be renewed every five years, and in Australia it has to renewed annually. 

How will the issues of medical misconduct be addressed?

The State Medical Council will receive complaints relating to professional or ethical misconduct against a registered medical practitioner.  If the medical practitioner is aggrieved of a decision of the State Medical Council, he may appeal to the Ethics and Medical Registration Board.  If the medical practitioner is aggrieved of the decision of the Board, he can approach the NMC to appeal against the decision.  It is unclear why the NMC is an appellate authority with regard to matters related to professional or ethical misconduct of medical practitioners. 

It may be argued that disputes related to ethics and misconduct in medical practice may require judicial expertise.  For example, in the UK, the regulator for medical education and practice – the General Medical Council (GMC) receives complaints with regard to ethical misconduct and is required to do an initial documentary investigation in the matter and then forwards the complaint to a Tribunal.  This Tribunal is a judicial body independent of the GMC.  The adjudication decision and final disciplinary action is decided by the Tribunal.

How does the Bill regulate community health providers?

As of January 2018, the doctor to population ratio in India was 1:1655 compared to the World Health Organisation standard of 1:1000.  To fill in the gaps of availability of medical professionals, the Bill provides for the NMC to grant limited license to certain mid-level practitioners called community health providers, connected with the modern medical profession to practice medicine.  These mid-level medical practitioners may prescribe specified medicines in primary and preventive healthcare.  However, in any other cases, these practitioners may only prescribe medicine under the supervision of a registered medical practitioner.

This is similar to other countries where medical professionals other than doctors are allowed to prescribe allopathic medicine.  For example, Nurse Practitioners in the USA provide a full range of primary, acute, and specialty health care services, including ordering and performing diagnostic tests, and prescribing medications.  For this purpose, Nurse Practitioners must complete a master's or doctoral degree program, advanced clinical training, and obtain a national certification.