There is no relief for the common man from skyrocketing fuel prices. A litre of petrol is retailing at Rs 79.99 in the national capital while the same is selling for Rs 87.39 in the financial hub of Mumbai. This marks yet another all-time high in petrol and diesel prices.
In one of the biggest jump on a single day ever since the government moved to daily revision in fuel prices, the price of petrol was hiked by Rs 0.48 per litre and that of diesel by Rs 0.52 per litre in Delhi. A litre of diesel now costs Rs 72.07 in Delhi and Rs 76.51 in Mumbai.
Fuel prices were raised for the second consecutive day on Friday after they were kept unchanged on September 5. The recent hike in fuel prices has been attributed to a sharp rise in international crude prices and a dramatic fall in the exchange value of the rupee against the US dollar. While the prices of fuel are on a continuous rise, the government has blamed the 'external factors' behind the spike and called the movement 'temporary'.
Finance Minister Arun Jaitley on Wednesday said, "there is no straight line movement of global crude oil prices. They go up, they come down. In April and May, there was a lot of pressure. In June, they came down. In July, they came down and in August, there is again (an upward) movement.
However, these arguments have cut no ice with a huge section of people. Opposition parties who have been demanding excise duty cut on petrol and diesel, will launch nationwide strikes and protests next week over record-high fuel prices, looking to tap rising public anger to hit back at Prime Minister Narendra Modi ahead of elections.
Meanwhile, the government has so far not given any indication to cut excise duty on petrol and diesel as it has limited fiscal space available to take any dent in revenue collections. According to reports, the government believes that the current account deficit will overshoot the target if it goes for excise duty cut on petrol and diesel.
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.
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).
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.