Govt blames global prices for high petrol and diesel cost, wants to bring oil under GST

Under fire for rising cost of oil in the domestic market, which remained at a four-year high for petrol and an all time high for diesel in the national capital on Monday, the government blamed high international prices for the spike with minister for petroleum and natural gas Dharmendra Pradhan making a case for oil to be included under the Goods and Services Tax (GST).  
 
Petrol and diesel prices rose for the 14th consecutive day on Monday to hit a high of Rs 73.83 and Rs 64.69 per litre respectively in Delhi. Since June 15 last year, when the government had introduced daily revision of prices, petrol prices have gone up by over 12 per cent while for diesel the increase has been even steeper at over 18 per cent. At the same time, prices of crude oil for the Indian basket has shot up by over 37 per cent during the period. India imports nearly 82 per cent of its crude oil requirement every year.
 
"There is nothing hidden in fuel prices in the country. If international crude prices go up then India will also feel the pinch," said Pradhan in Delhi on Monday.  "We are sensitive regarding petrol and diesel price hike. We have advocated for bringing petroleum products under GST. We want GST Council to soon take a decision regarding this. I am hopeful that petroleum products will also come under GST soon."
 
The all time high domestic prices at the retail level however do not truly reflect similar corresponding highs in international prices. Ever since petrol prices were de-regulated in June 2010, the crude price for the Indian basket hit an all time high $ 123.61 per barrel in March 2012. The domestic price of the fuel then was only Rs 65.64 per litre. Similarly, when domestic prices touched an all time high Rs 76.06 on September 14, 2013, crude oil price for the Indian basket was hovering at $ 109.47 per barrel, almost 72 per cent more than today. The invisible factor between the two is taxes.
 
In the past four years excise duties on the two fuels have been hiked a dozen times. As a result, the government today gets Rs 10 per litre excise duty more on petrol than what it did in 2014. For diesel, the government gets almost Rs 11 per litre more than four years ago. Excise duty on petrol has gone up by 105.49 per cent (including the only time when duties were cut by Rs 2 per litre last October), while on diesel it has shot up by over 240 per cent during the time.
 
Similarly state governments have also increased VAT, whose collection has gone up by over 31 per cent or Rs 3.74 per litre on petrol and nearly 44 percent or Rs 3.4 per litre on diesel. At the same time, the petrol pump owners have seen their commission go up by 80 per cent on petrol and 111 per cent on diesel between April 2014 and March 2018.

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