May 2021 continues to see a spate of price hikes in fossil fuel prices. The latest – on May 18 – raised petrol price by 26 paise and that of diesel by 31 paise. While the two fuels were already retailing at all-time highs, the latest price hike takes petrol within sniffing distance of the Rs 100-a-litre mark. As of today, it is just 86 paise short. A few days of similar 26-odd paise hikes will easily drive it over to that new high.
A close look at the fuel price table of four metros above reveals that motorists in Mumbai, the financial capital of the country, have to pay the most. In a 13-day span (May 5 and May 18) petrol has become costlier by 2.02 a litre and diesel by Rs 2.52. Extend the math to April 1,2020, which is barely 14-and-a-half months ago, and the motorist has had to pay Rs 23.86 more for a petrol litre and Rs 25.52 for a diesel litre – to travel the same distance, albeit this time on cleaner BS VI fuel.
Highly taxed fuels
One of the reasons for the wallet-busting fuel prices is the high level of Central and State taxes. For instance, 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 in the capital city. It’s similar with diesel. While Central taxes comprise 38.21% of the price, state VAT accounts 14.64% of the retail price. Cumulatively, taxes comprise 52.85% of the final selling 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.
Little wonder Bal Malkit Singh, Chairman – Core Committee and former president, All India Motor Transport Congress, who spoke to Autocar Professional recently, is worried. He says the CV industry, which tanks up on diesel, is bearing the brunt of the fuel price rise. “India's commercial vehicle industry is currently losing Rs 1,600 crore a day. The country is facing the unprecedented pandemic, everyone is already facing a huge crisis be it losing their loved ones, depression, stress or having no source of livelihood. In our industry, almost 70% of the trucks are idle, only 30% are operational and that too in the essential delivery segment – oxygen, medical equipment, medicines or FMCG goods.”
“There are around 20 crore people directly or indirectly involved in the transport or trucking sector. The fuel price hike impacts almost 130 crore people. Diesel as a fuel constitutes almost 65% of our operational cost. It is quite obvious with the increase in fuel prices, our operational cost will go up. On the other hand, there is low capacity utilisation because of the lockdowns in almost the entire country.”
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