A worker writes the updated fuel prices on a board at a filling station in Kolkata. (PTI)

Petrol, Diesel At Record High After Steepest Hike In A Year

The petrol and diesel prices today were hiked by about 50 paise a litre each—the steepest increase since daily price revision came into effect over 14 months ago—to push rates to their highest ever.

According to a price notification issued but the state fuel retailers, the price of petrol was hiked by 48 paise a litre while diesel saw its value elevated by 47 paise.

A litre of petrol in Delhi now costs Rs 79.99, a record for the city. A litre of petrol will set you back by Rs 87.39 in Mumbai. Diesel is now priced at Rs 72.07 a litre in Delhi and at Rs 76.51 per litre in Mumbai.

Also read: As Prices Rise, Petrol Demand May Adjust Quicker Than Diesel

Opposition parties blame the inflated taxes for the high prices of the fuels and have announced nationwide strikes and protests next week.

On Wednesday, Finance Minister Arun Jaitley remained non-committal on cutting excise duty to cushion the spiralling petrol and diesel prices, saying international oil prices are volatile and have not shown any linear movement.

Since mid-August, petrol price has risen by Rs 2.85 a litre and diesel by Rs 3.3 a litre as rupee hit a record low against the U.S. dollar, making imports costlier.

The Congress party demanded that the Centre should cut their excise duty a manner akin to the previous governments which cut rates whenever international oil prices shot up.

Almost half of the retail selling price of the two fuels is made up of central and state taxes. Prices have been on a high since mid-August, rising almost daily due to a combination of drop in the rupee value and the rise in crude oil rates.

On Tuesday, former Finance Minister P Chidambaram had stated that the “relentless rise in prices of petrol and diesel is not inevitable” since the price is built up by excessive taxes levied on the fuels and if taxes were cut, prices would decline significantly.

Also read: Chidambaram Says Government’s “Excessive Taxes” To Blame For Rise In Petrol Prices

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. In addition to this, states levy a VAT on these fuels. The lowest additional tax on the fuels is levied in the Andaman and Nicobar Islands where a 6 percent sales tax is charged on both the fuel.

Mumbai has the highest VAT of 39.12 percent on petrol, while Telangana levies the highest VAT of 26 percent on diesel. Delhi charges a VAT of 27 percent on petrol and 17.24 percent on diesel.

The central government had raised its excise duty on petrol by Rs 11.77 per litre and that on diesel by Rs 13.47 per litre in nine installments between November 2014 and January 2016. The elevation in excise duty was to shore up finances as global oil prices tumbled.

This led to its excise collections from petro goods more than doubling in the last four years—from Rs 99,184 crore in 2014-15 to Rs 2.29 lakh crore in 2017-18. States saw their VAT revenue from petro goods rise from Rs 1.37 lakh crore in 2014-15 to Rs 1.84 lakh crore in 2017-18.

Prices in Delhi are the cheapest among all metros and most state capitals due to the city’s muted sales tax or VAT.

Also read: Jaitley Reserved On Slashing Excise Duty As Fuel Prices Soar To New High