Petrol and diesel prices are again making headlines with prices soaring to new highs on the back of surge in international crude oil price due to increased demand as well as production cuts.
Local and central levies which make up more than 50% of the retail price for diesel and fuel varies from state to state and in October this year government cut the excise duty on both the fuels by Rs. 2 per litre. Following this some of the states including Gujarat and Maharashtra also reduced VAT levy on fuel.
Discussion to bring petroleum products under GST ambit did not take any concrete shape and hence fuel prices vary.
As per the Indian Oil Corporation website, diesel in metros including Delhi, Kolkata, Chennai and Mumbai was sold at a price of Rs. 59.31, Rs. 61.97, Rs. 62.48 and Rs. 62.75 per litre respectively on Tuesday. The prices were the highest in 3 years time for both Kolkata and Chennai.
While petrol prices on Tuesday recorded the highest price since November 2016 in Chennai , Delhi and Kolkata and was sold at Rs. 69.93 per litre in Delhi.
State-owned oil companies in mid June dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision model to instantaneously reflect changes in cost in international crude oil prices. Prices of petrol and diesel are revised at 06:00 hours everyday since June 16.
The international crude oil rates currently trade at $65 per barrel and as India imports more than 80% of its oil requirement its import bill will increase in the same proportion and hence put pressure on the exchequer due to increase in inflation.