Petrol and diesel prices continued to rise for the eighth straight day and touched new records after the state-run oil marketers increased rates in line with crude oil prices.
The price of petrol is now Rs 84.4 a litre in Mumbai and diesel retails at Rs 72.21 a litre, according to the data shared by Indian Oil Corporation Ltd. Oil marketing companies have been revising auto fuel prices daily since June last year. The latest series of increases resumed on May 14, after a 19-day freeze in the run-up to the Karnataka elections.
The government needs to roll back the excise duty hikes undertaken when crude oil prices were lower, according to Kerala's Finance Minister Thomas Isaac. “They [the Centre] were calibrating their excise upwards to mop the entire benefit of falling crude prices. Now they can do the reverse and prices would be stable again,” he told BloombergQuint in an interaction. “I don't know why they refuse to do that.”
Isaac added that it may be too early to bring petroleum products under the ambit of the Goods and Services Tax. “Before putting petroleum under GST, it would be better to let GST settle down. The best option would be for the Centre to roll back the tax or at least calibrate the tax downwards so that the increase in crude prices does not increase retail petrol or diesel prices,” he said.
Brent crude reached $80 a barrel on Thursday, the highest since 2014. Production cuts brought in by an agreement between the Organization of Petroleum Exporting Countries and Russia, as well as shrinking supplies from Venezuela have contributed to the rise in oil prices. The latest spike came on the back of U.S. decision to exit the nuclear deal with Iran and reimpose sanctions.