It’s a century India should not be proud of. After staying 6 paise short of the Rs 100-a-litre mark for two days at a Brandmanesque Rs 99.94, today’s hike – the 15th in May 2021 – has taken the price of petrol past Rs 100 at Rs 100.19 in Mumbai. The country's financial capital has become the first metro city to record this new high.
Since January 1, 2021, when petrol cost Rs 90.30 a litre in maximum city, it has risen by 9.89 a litre. And since April 2020, when the BS VI era kicked in, it has become more expensive by Rs 24.91 a litre. Motorists in three other metros cities – Delhi, Chennai and Kolkata – pay Rs 6.25, Rs 4.68 and Rs 6.22 a litre less respectively than their counterparts in Mumbai (see detailed price table below).
Those tanking up on diesel – once known as the ‘common man’s fuel – are not spared of the price hike either. In fact, the rate of price increase in diesel is more than petrol. In Mumbai, today’s increase makes diesel dearer by 30 paise, taking the fuel to Rs 92.17 a litre. It has become costlier by 28 paise in Delhi (Rs 84.89), 26 paise in Chennai (Rs 89.65) and 28 paise in Kolkata (Rs 87.74).
The price differential between petrol and diesel, which was Rs 10.09 15 months ago – on April 1, 2020 – has now narrowed down to Rs 8.02 in Mumbai.
Much more money to travel the same distance
These wallet-busting fuel prices are hitting the Indian motorist – on two-, four and more wheels – very hard. For instance, the owner of a fuel-sipping commuter motorcycle like the Hero Splendor, which has an 11-litre tank, would have paid Rs 828 to tank up on April 1, 2020 in Mumbai. Today, he pays Rs 1,102 – which is Rs 274 more – to go the same distance.
When it comes to cars, a Mumbai-based owner of a petrol-engined Maruti Wagon R which has a 35-litre fuel tank, will today pay Rs 3,506.65 to tank up compared to Rs 2,634.80 on April 1, 2020 – a sizeable difference of Rs 871.85. Meanwhile, to tank up his/her Hyundai Creta Diesel, which has a 50-litre fuel tank, the user will have to fork out Rs 4,558.50 today in Mumbai, compared to Rs 3,259.50 barely 15 months ago on April 1, 2020 – a marked difference of Rs 1,299.
In the case of commercial vehicles, the unabated price increase for diesel would be hitting their profitability hard. The TCO – Total Cost Of Ownership – formula is being hit for a six. Already badly impacted by the Covid-induced downturn and lack of business, owners of medium and heavy commercial vehicles (M&HCVs) or even small CVs will be compelled to rejig their business models. For instance, a 37-tonner Tata truck like the LPT 3718 has a 400-litre tank. In April 2020, a full tank of diesel would have cost the owner Rs 26,076 in Mumbai. Now, in end-May 2021, he has to pay Rs 36,868 for the same quantity of diesel – Rs 10,792 more – each time the truck is tanked up.
Highly taxed fuels
One of the reasons for the wallet-busting fuel prices is the high level of Central and State taxes. Of the Rs 100.19 a motorist pays for a litre of petrol, an estimated Rs 62 or 62% of the retail price goes towards Central Excise Duty and State Value Added Tax. Of the Rs 92.17 that a litre of diesel costs, taxes account for Rs 53 or 49% of the retail price.
In Delhi, an estimated 35.53% of a petrol litre is levied as the Central government’s ‘Excise Duty’ and 23% is what the state levies. Put together, taxes account for 58.60% of the price of petrol – or Rs 55 – in the capital city.
It’s similar with diesel in Delhi – while Central taxes comprise 38.21% of the price, state VAT accounts 14.64% of the retail price. Cumulatively, taxes comprise 52.85% – or Rs 44.86 – of the final retail price to the consumer.
The unabated increase in the price of fuels has exacerbated since end-April, after the election process in five states concluded. Motorists had for close to two months before that seen a welcome stoppage in fuel price increases but now it looks they are back with a vengeance. And at a time when social distancing has meant more people taking to personal travel, the impact is being felt by all.
And, with galloping away prices of diesel, the impact on overall inflation can be seen. Reports have shown that as per the wholesale price index (WPI), inflation rose to 10.49% in April 2021 compared to a decline of 1.7% in April 2020.