Petrol Price Hike : Horrors of the Past Return

 The fuel prices in the country have been on an upward trend since ever since the declaration of assembly election in five states on May 2 2021, after oil marketing companies (OMCs) resumed their price increases in May 2021. In many states, the petrol prices have already crossed Rs 100/Liter and many states, they are inching closer to that mark. There was a total of 16 prices hike in the month of June - the same as in May 2021.


Petrol/ Diesel Pricing in India

The major things on which petrol prices depends are:
1. Cost of refined crude oil
2. Price to dealer, dealers commission and Excise duty (Central Gov), VAT (State Gov)
3. Price paid by Customer

The price of fuel is governed by the international market. WTI crude oil comes from USA while Brent crude comes from Europe’s North Sea. OPEC basket comes from middle Eastern countries and Africa. Oil prices at international market at present (per barrel): -
              a) WTI crude: $73.75
              b) Brent crude: $75.51
              c)  OPEC Basket: $ 71.56

The barrel is around 158 to 159 liters. Thus, Indian Government spends approximately 5300 Rupees to get 1 barrel of crude oil. Freight charges are to be added to this price list. It depends on the distance of the exporter. Even if the prices of the crude is low, the end consumer does not get any benefit. The average Tax paid by the users is almost 150% on the prices paid by dealers.

Take a  look at the table below to understand the prices :- 

High central excise has increased manifold since 2014

After assuming office in 2014, NDA Government which has steadily hiked  
central excise duty to levels which are five times or even higher than in 2014, has persistently refused to reduce it to provide some relief to people. When in the opposition, BJP used to oppose tooth and nail even small hikes in excise duty in petrol and diesel, totally overlooking the fact that under recoveries of oil companies had spiraled out of control and touched a whopping Rs. 1.61 lakh Crores in 2012-13. Prices were then high also because international prices of crude oil were at a record high. Prices were high despite the subsidies given by the UPA Government to diesel, kerosene and LPG, which provided a cushion to domestic consumers.

The BJP Government at the Centre, on the other hand, has been busy lowering or withdrawing subsidies. And despite oil prices in international markets having remained consistently low for the last six years, Indian consumers have continued to pay a high price.
The Present excise duty on petrol is Rs. 32.98 per liter, which was Rs. 9.49 per liter in May, 2014. The excise duty on diesel Rightnow is Rs. 31.83 which was Rs 3.56 in May 2014. In other word, excise duty on petrol is 348% higher now than in 2014. Excise duty on diesel 894% high as compare to 2014.
Petrol and diesel prices on 15.03.2014 were ₹73.20/liter and ₹55.48/liter respectively which have now soared to a historical high as Petrol and diesel prices touched ₹90.34/liter and ₹80.51/litre respectively in Mumbai on December 16, 2020.

Let us examine Delhi’s fuel prices to understand how taxes are levied on both petrol and diesel. As of December 16, 2020, prices of petrol and diesel in Delhi were ₹83.71 and ₹73.87 respectively. However, the base price including freight of Petrol is still ₹27.74 per litre, which is just 33.1% of the retail selling price (RSP) of ₹83.71. In case of diesel, this is ₹28.66, i.e., 38.8% of the RSP.
From every single litre of petrol sold in Delhi, the central government now collects ₹32.98 as central excise duty, which is 119% of the base price including freight while the state VAT comes to ₹19.32, which is 70% of the base price including freight.
Similarly, in case of diesel, the Central excise duty is ₹31.83, which is 111% of the base price including freight and State VAT is ₹10.85, ie, 37.9% of the base price including freight.  


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