Like the never-ending fall in value of rupee against the US dollar, hike in fuel prices have continued unabated for a while. On Friday, diesel touched a lifetime high of Rs 70.21 in the national capital while the price of petrol was at Rs 78.52 per litre in Delhi.
With a surge of 28 paise per litre, diesel is selling above the 70-mark for the first time in Delhi. In country's financial hub Mumbai, diesel was retailing at Rs 74.54 per litre, and in Kolkata, a litre of diesel now costs Rs 73.06. Petrol prices too have gone up by around 21 paise per litre to Rs 81.44 in Kolkata and Rs 85.93 in Mumbai.
Fuel prices have been on the rise since August 16 after the rupee dipped to its lowest value against the US dollar. The rupee hit record low of 71 level to the dollar for the first time ever today due to strong demand for the greenback from oil importers and surging crude oil prices stoking inflation fears.
Fuel prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT. Diesel price had previously hit its highest level on May 29 when it reached Rs 69.31 a litre mark in Delhi.
Petroleum prices may continue to go up as the international markets are under pressure due the US sanctions on Iran and Saudi Arabia's decision to cut oil production. Iran - which is the second biggest oil exporter to India and the third-largest oil producer in the OPEC Group - is set to plunge into crisis once the United States' sanctions come into effect on November 1.
This year in May, Bank of America Merrill Lynch observed that the deteriorating conditions in Iran may push the crude oil prices to $100.
State-owned oil firms had in mid-June last year dumped the 15-year practice of revising rates on 1st and 16th of every month in favour of daily price revisions.
High prices have off-and-on triggered demands for a reduction in excise duty but the government had ruled out any immediate cut.
The centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy value added tax (VAT) - the lowest being in Andaman and Nicobar Islands where a 6 per cent sales tax is charged on both the fuel.
Mumbai has the highest VAT of 39.12 per cent on petrol, while Telangana levies the highest VAT of 26 per cent on diesel. Delhi charges a VAT of 27 per cent on petrol and 17.24 per cent on diesel.
The central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by 13.47 a litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
This led to its excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. States saw their VAT revenue from petro goods rise from Rs 1,37,157 crore in 2014-15 to Rs 1,84,091 crore in 2017-18.