Petrol, Diesel Prices Significantly Hiked In Delhi After 50 Days

After 50 days of stagnancy, petrol and diesel prices in Delhi were hiked on Tuesday sharply by Rs 1.67 and Rs 7.10 per litre, respectively.

Petrol price in Delhi was increased from Rs 69.59 to Rs 71.26 per litre and diesel was priced at Rs 69.39 from Rs 62.29 per litre before. A PTI report said that the hike in prices was due to an increase in VAT on fuel by the Delhi government.

Fuel prices in the other major Indian cities like Mumbai, Chennai, Kolkata and Bengaluru remained unchanged in the daily revision made by state-owned Indian Oil Corporation Limited (IOCL) on these retail prices on Tuesday.

Despite making daily revisions in retail prices based on changes in the international oil prices and the exchange rates, these rates have been kept unchanged by government oil marketing companies since 14 March.

Oil prices have seen significant correction due to the fall in demand after major cities called for lockdowns to curb the spread of COVID-19. Brent crude, the global benchmark for oil has fallen about 60 percent in 2020 to trade below $30 a barrel.

As expected, state governments have been announcing an increase in duties on the retail price of fuel, taking advantage of the dip in oil prices, to make for the loss in tax revenue amid the lockdown.

Nagaland, Assam, Meghalaya and Haryana have already announced an increase in VAT on fuel sold in these states.

This hike may also be seen at the central government level as Finance Minister Nirmala Sitharaman had moved an amendment to the Finance Bill, 2020 in March enabling powers to raise excise duty on petrol and diesel by Rs 8 per litre each in the future. The bill was passed less than a week before the nationwide lockdown was declared to contain COVID-19.

Since retail prices in petrol pumps have not reflected the correction in oil prices, it allows room for state and central government to raise duties on fuel to increase revenue while keeping the final consumer prices fairly same.