Fuel prices down fourth straight day: Petrol price cut by 9 paise to Rs 78.20, diesel at Rs 69.11 in Delhi

Petrol price today came down by 9 paise to Rs 78.20 in Delhi. This is the fourth straight cut - though marginally - after the fuel price hit an all-time high of Rs 78.43 on May 29. Today's petrol price in Mumbai is Rs 86.01, down by 9 paise; in Kolkata Rs 80.84, down by 8 paise and in Chennai Rs 81.19, down by 9 paise. Diesel price has also been cut by 9 paisa in the national capital.

Last month, petrol and diesel prices hit a record high due to rise in international crude oil cost. However, the crude prices witnessed a marginal cut earlier this week after Saudi Arabia and Russia announced that they were willing to lift supply curbs that had pushed crude prices to their highest since 2014. Last year, the organization of the petroleum exporting countries and Russia had decided to cut the supply to prop up the prices that had fallen to their lowest in more than a decade.

The fuel prices may have come down by a few paise, but it is still not enough to convince the people and farmers who think that they are paying way more than what they should pay. Rising anger among people might be justified as the fuel prices in India are the highest in South Asia countries.

The opposition parties have also been demanding the Centre and the states to bring down the taxes to provide some relief to the consumers. However, the market analysts believe that the Centre does not have enough space to cut excise duty as one rupee cut will result in Rs 13,000 crore loss for the government annually.

However, the states can cut VAT by up to Rs 2. According to a SBI report, the states can slash petrol price by Rs 2.65 per litre and diesel by Rs 2 a litre if they decide to forgo potential gains out of high crude oil prices. It said that the states earn an additional revenue of Rs 2,675 crore for every USD 1 per barrel increase in oil prices.

"Given that these revenue if foregone will not impact states fiscal position, we estimate that on an average, states can cut petrol prices by Rs 2.65/litre and diesel by Rs 2/litre, if the entire revenue gain was to be neutralised," the report argued. Despite the room for tax cut on fuel, no BJP-ruled states have moved so far in that direction. Kerla is the only state that has cut the tax on petrol and diesel by Re 1.

In an interview to India Today, Union Petroleum Minister Dharmendra Pradhan recently said that that different state has its unique economy and have their own expectations and expenses. He was responding to a question as to why the centre was not persuading the BJP-run states to cut tax on petrol and diesel. He, however, said that the efforts were being made in GST Council to develop a consensus among states to bring petrol and diesel under the GST.

Bringing fuel under GST will bring down the prices only if the states do not add any further cess and charge the taxes already there in the GST structure. Last month,  Bihar Deputy Chief Minister Sushil Kumar Modi said that "It is a big misconception (among the people) that price of petroleum products will be reduced significantly if they are brought under GST ambit. Instead, the move will have minor impact in terms of reducing prices of petroleum products."

Sushil Modi, who also heads the GST Network panel, further said:  "Under the GST regime, there is a practice across the world which empowers states to impose tax over and above the highest GST tax rate. This has been the practice followed everywhere in the world where GST has been implemented."