On Friday, petrol and diesel prices reached new all-time highs as oil marketing companies revised domestic fuel prices across India for the second consecutive day. In the national capital, petrol is priced at an all-time high of ₹ 86.95 per litre, while diesel costs ₹ 77.13 per litre. As per price notification by state-run oil marketing companies, petrol and diesel rates were hiked by 35 paise a litre each after a gap of a week. According to a PTI report, fuel retailers said the government can cut taxes to ease consumer burden.
On Thursday, petrol and diesel were priced at ₹ 86.65 per litre and ₹ 76.83 per litre, respectively. As of today, the two auto fuel rates have remained steady across the country. Customers in Mumbai have to pay ₹ 93.49 per litre and ₹ 83.99 per litre for petrol and diesel respectively.
Mukesh Kumar Surana, head of India's third-largest fuel retailer Hindustan Petroleum Corporation Ltd (HPCL) said there has been an unexpected spike in global oil prices in the last 2-3 days to USD 59 per barrel due to a perception of mismatch in demand and supply as well as cut in production by Saudi.
The retail prices of the auto fuels are arrived at by including central and state taxes followed by dealer commission to the benchmark cost of production. He also said that only 25-30 per cent of the retail pump rates are dependent on international benchmark cost and the rest are central and state taxes.
He said, "We probably have no choice but to pass on the variation (in benchmark cost) to the consumer. The government has a taxation handle. The margins are low and the government alone can answer how prices should be paused.
In a written reply to a question, Oil Minister Dharmendra Pradhan told the Rajya Sabha that excise duty levied by the Central government on petrol is ₹ 32.98 per litre in Delhi, while the state government imposes VAT or sales tax of around ₹ 19.55. For diesel, the central excise adds up to ₹ 31.83 and VAT to ₹ 10.99. Apart from this, the petrol and diesel retail prices also include a dealer commission of a minimum ₹ 2.6 per litre on petrol and ₹ 2 on diesel.
Petrol and diesel prices have increased by ₹ 17.11 per litre since mid-March 2020 after the Indian government increased taxes to gain from fall in international oil prices. On the other hand, diesel prices have gone up by ₹ 14.54.
Speaking at the South Asia Commodities Forum of S&P Global Platts on Thursday, Pradhan warned that rising oil prices could hurt the global economic recovery. He said, "Efforts at artificially distorting prices will have a dampening effect on the fragile global economic recovery that is underway. While we do not favour too low prices, we also do not support high prices, which deny energy access to millions in India."
"If the world has to grow as a whole, there has to be a mutually supportive relationship between producers and consumers. It is in the interests of producers that oil-dependent economies keep growing steadily."