Fuel prices in India were raised for the 21st consecutive day on Saturday. The present back-to-back upward revision could be attributed to the fact that central and state governments, along with oil marketing companies are looking to make up for their loss in revenues due to the lockdown and slowdown in economic activity.
On 27 June, petrol prices per litre were raised by 25 paise to Rs 80.38 in Delhi, Rs 87.14 in Mumbai, Rs 83.59 in Chennai, Rs 82.99 in Bengaluru and Rs 82.05 in Kolkata.
Diesel prices per litre were raised by 21 paise to Rs 80.40 in Delhi, Rs 78.71 in Mumbai, Rs 77.61 in Chennai, Rs 76.45 in Bengaluru and Rs 75.52 in Kolkata.
Earlier this week, diesel price in Delhi became costlier than petrol for the first time ever. Since 7 June, after an 82-day pause in the daily revision of fuel prices, state-owned marketing companies have increased diesel price in the national by Rs 11.01 a litre.
While diesel had already peaked to new record highs last week, petrol prices are close to the all-time high rates last seen in October 2018 when international oil prices had spiked close to $80 per barrel. In October 2018, petrol price in Mumbai had crossed Rs 90-mark and in Delhi, it was around Rs 83 per litre.
In comparison, on Friday, Brent crude, the international benchmark for crude oil prices, closed below $41 a barrel.
Fuel prices are revised by state-owned oil marketers on a daily basis, however, this revision was paused for 82 days amid the nationwide lockdown despite global crude oil prices falling to multi-year lows. These rates are based on international oil prices, forex rate and central, state/ local taxes.
Last month, the central government had increased the excise duty on per litre of petrol by Rs 10 and per litre of diesel by Rs 13. Several state governments have also hiked their VAT or cess on fuel in the last month. In fact, now around 70 percent of the retail price of fuel is just some form of tax.
On 4 May, amid falling revenues due to the coronavirus pandemic, Delhi government had increased VAT on both the fuels to 30 percent. For diesel, it was an increase from 16.75 percent earlier causing an increase of Rs 7.10 per litre, which is much higher than the impact on petrol that was imposed with a state VAT of 27 percent earlier, increasing its rate by Rs 1.67 a litre.