Petrol and diesel prices are flaring up like never before in nearly 30 days. On Thursday, the state-run oil companies hiked petrol rates by 35 paise in the national capital, taking the overall cost of one litre of petrol to Rs 86.65. Diesel, too, has been increased by 35 paise per lire in Delhi. With this, diesel prices have surged to Rs 76.83 per litre.
So far, petrol rates have increased by Rs 2.94/litre and diesel by Rs 2.96/litre since January 6. Apart from Delhi, the fuel prices have skyrocketed in other metro cities as well. Unabated rise in petrol and diesel prices could be alarming for the common man.
The current cost of one litre of petrol in Mumbai is Rs 93.20/litre, in Hyderabad its Rs 90.10/litre, in Chennai Rs 89.13/litre, and in Kolkata its Rs 88.01/litre.
Diesel prices have jumped to Rs 83.67/litre in Mumbai; Rs 83.81/litre in Hyderabad; Rs 82.04/litre in Chennai, and Rs 80.41/litre in Kolkata as of February 4.
Meanwhile, on a global level, oil prices extended gains on Thursday after the OPEC+ alliance stuck to a reduced output policy. Brent crude futures gained 47 cents, or 0.8 per cent, to $58.93 a barrel, by 8:47 AM (IST) While, US West Texas Intermediate (WTI) crude futures climbed 49 cents, or 0.9 per cent, to $56.18 a barrel.
While alone rising international crude prices cannot be blamed for skyrocketing fule rate in India. The other reasons for increased petrol and diesel prices are Central excise duty and states' Value Added Tax (VAT).
It must be noted that the government has hiked the excise duty on petrol and diesel at the beginning of this fiscal in line with the reduced oil prices. This in turn has helped the Government shore up its revenues, especially in the context of Covid-19 pandemic when all the other tax revenues collections were hit hard. Net union excise duty was budgeted at Rs 2.67 lakh crore in FY21, however the revised estimate is much higher at Rs 3.61 lakh crore, an addition of Rs 94,000 crore.
According to Petroleum Planning and Analysis Cell (PPAC), the petrol is priced at around Rs 26.34 per litre. The rest is taxes, duty and dealer's commission.
Despite the escalating fuel prices, the Centre in the Budget 2021 did not respond to calls to lower taxes on transportation fuels. Instead, it introduced a new agriculture infrastructure development cess (AIDC) on petrol, diesel and several other imported items. While the Centre clarified that the new cess won't place any additional burden on consumers, states are likely to lose some revenue. The new cess is Rs 2.5 per lire on petrol and Rs 4 per litre on diesel.