Fuel prices in India in some of the cities has already gone past Rs. 100 per litre and the upward trend is likely to continue. Here are some of the reasons:
1. Fuel rates in India move in line with international crude rate:
Petrol, diesel rates in India move in international pricing of crude. And of late as demand for crude is seen to be positive amid economic recovery and the recent push was given by the US cold catastrophe, which pushed crude prices to above $ 65 per barrel, price in India also continued to surge.
2. Government unwilling to cut on taxes on fuel:
As it is the government is facing shortfall in revenue and to boost up the economy and take it out from the downfall it saw amid the outbreak of corona it is in need of funds and hence unlikely to cut down on excise duty on fuel. Though the Budget 2021, demanded the centre to oversee tax on fuel so as to bring prices under control.
3. Taxes make up the most part of the revenues from fuel:
61.2 percent of the taxes make the retail price of petrol, while in the case of diesel the share of tax is 56.3 percent.
And now, any increase in fuel rates, will dampen demand at other fronts and may also lead to higher cost of products.