In India, fuel prices are rising higher as, on Tuesday, petrol cost Rs. 89.29/- a litre in Delhi, while diesel cost Rs. 79.70/- a litre. In some parts of India, such as Rajasthan and Madhya Pradesh, petrol even crossed the Rs. 100/- mark for the first time. In Guwahati, Assam Petrol prices have been turning more volatile, as prices of crude oil have been showing a firm trend. On Friday, the petrol price in Guwahati ₹ 87.33/- (19th February 2021).

According to reports, in Rajasthan’s Sriganganagar, petrol prices have reached the Rs. 100 per litre mark. Currently, a litre of petrol retails at Rs. 100.49 while diesel is priced at Rs. 92.47 for a litre.

Rajasthan levies the highest VAT on fuel in the country. However, despite a 2% cut in VAT, the prices have been at an all-time high. On petrol, the state levies 36% VAT + Rs. 1.5 / litre road cess while diesel has 26% VAT and Rs. 1.75 / litre cess.

In Mumbai, petrol retails at Rs. 96.32 and diesel at Rs. 87.32. In Delhi, the prices are Rs. 89.88 and 80.27 for petrol and diesel respectively.

 

But why the prices of Petrol and Diesel rising in India?

Crude oil prices have risen over by 50 per cent since October. Crude oil prices collapsed in April 2020 due to falling demand in the coronavirus pandemic. Both central and state government have hiked central excise duty and sales taxes to boost revenues.

As per moneycontrol, “There are two major reasons for the current hike in fuel prices – rise in international crude prices and higher central and state taxes. During the pandemic, the central government had raised the excise duty on petrol to Rs 32.98 a litre from Rs 19.98 a litre. A similar increase was affected on diesel, where excise duty was increased to Rs 31.83 a litre from Rs 15.83 a litre. Several state governments too had increased the Value Added Tax (VAT) on fuel during the same period.’

Since India imports 84 per cent of its domestic demands for crude oil. Therefore, Brent crude prices have a direct bearing on domestic fuel prices. Oil marketing companies revise fuel prices on the basis of international prices.

 


In 2010, the Manmohan Singh government deregulated petrol prices. In 2014, the Narendra Modi government deregulated diesel prices as well. Subsequently, the subsidy that the government used to pay to the oil marketing companies ended.

 

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