Petrol price up by Rs 4.18 a litre in a month, diesel by Rs 4.03

by Ajit Dalvi 01 Jul 2021

July has dawned and mercifully there has been no change in petrol and diesel prices . . .  since two days. The last hike in the two fossil fuels was on June 29 by 28 paise (petrol) and 24 paise (diesel).

There were a total of 16 prices hikes in June – the same as in May 2021 – which have increased the price of petrol in Mumbai by Rs 4.18 a litre and that of diesel by Rs 4.03 a litre. Fuel prices have been on a constant surge since May after oil marketing companies (OMCs) resumed their price increases on May 4.

Take a close at the price table above for four metro cities in India and you find that the increase is maximum for the motorist in Delhi – Rs 4.32 a litre, followed by Mumbai (Rs 4.18), Kolkata (Rs 4.14) and Chennai (Rs 3.81). Excise duty remains the same on July 1 – Rs 32.90 – as it was on June 1.

What the price build-up data reveals
Data for the price build-up of petrol in Delhi reveals that over a month, the base price of petrol has risen by Rs 3.3 a litre, which dealers are paying but make 3 paise more as their commission per litre, even as freight costs per litre remained the same at 36 paise. Value-Added Tax (VAT) has increased by 99 paise a litre.

On the diesel front, the build-up for the price increase in a month shows that the base price of this fuel has risen by Rs 3.25 a litre, VAT has increased by 54 paise a litre. Excise duty remains unchanged at Rs 31.80 a litre.

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, 33.29% (Rs 32.90) of the price of petrol litre (Rs 98.81) is accounted for by excise duty. Add 23.07% VAT (Rs 22.80) to that and what you get is 56.36% (Rs 55.70) of petrol price being tax. That’s what consumers will pay as tax when they tank on petrol in Delhi today.

It’s the same wallet-busting story with diesel but with a slight difference. Excise duty is more percentage-wise – 35.65% (Rs 31.80) while VAT in Delhi is 14.62% (Rs 13.04) of the retail price of Rs 89.18 a litre. Add excise duty and VAT –  Rs 44.84 – and they make up 50.28% of the final retail selling price of diesel in Delhi today: Rs 89.18 a litre.

Global crude prices firm up
The rise of petrol and diesel prices is a direct impact of the marked increase in global crude oil prices, which in turn is a result of the key global economies like the USA, Europe and China swinging back into work mode after the impact of the pandemic.

Brent crude oil is trading today at US$ 74.69, up from S70.35 a month ago on June 1. With these global trends, crude oil prices are not expected to fall anytime soon. So the Indian motorist will have to contend with skyhigh petrol and diesel prices are sometime, unless the Central government and state governments decide to reduce their taxes on the two fuels.


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