Petrol up by Rs 17 a litre, diesel by Rs 17.47 in nine months

by Ajit Dalvi 23 Jan 2021


The price increase in fossil fuels continues unchecked, burning a big hole in motorists wallets and making transporters – both fleet and small operations – unsustainable. Today’s (January 23) latest price hike both petrol and diesel to their new highs: petrol is now priced at Rs 92.28 a litre and diesel at Rs 82.66 a litre in Mumbai. Since January 1, the prices of these two fuels have risen by Rs 1.22 and Rs 2.15 respectively a litre.

Given that the price of petrol in Mumbai was Rs 75.28 a litre on April 1, 2020, it means the cost of this fuel has risen by Rs 17 a litre in nine-and-a-half months. For diesel, the price rise is even steeper – from Rs 65.19 a litre on April 1, 2020 to  today’s Rs 82.66 in Mumbai, the price increase is Rs 17.47.

The price differential between the two fuels which was Rs 10.09 a litre at the start of the fiscal year FY2021 is today down to Rs 9.62 a litre, indicating the speedier price rise in the ‘common man’s fuel’ – diesel.  

Transporters across the country, which have felt the heat of the Covid-19-induced slowdown in demand over the past eight-odd months and seeing their CV fleets idle, are understandably riled. The All India Motor Transport Congress (AIMTC), which represents around 7.5 million truckers and transporters, 4 million bus operators, 160,000 goods transport companies and 2,500 taluka district and State-level federations and transport associations,  has called for an emergency meeting to debate the issue and urge the government to reduce fuel prices.

Taxation hurts and how
The high prices of fossil fuels are a direct result of high taxation. PTI recently reported that the government had raised excise duty on petrol by Rs 13 per litre and that on diesel by Rs 16 a litre in two tranches to mop up gains arising from international crude oil prices falling to a two-decade low. With this, the total incidence of excise duty on petrol rose to Rs 32.98 per litre and that on diesel to Rs 31.83 a litre.

While GST, since it was introduced in 2017, applies on most products, oil products and natural gas have been kept out of its purview. Excise duty, which accrues to the Centre, and Value Added Tax (VAT) which goes to state government, is applied on the sale of fuels. A sample of the price build-up of petrol and diesel prices (on january 16, 2021, in Delhi) is depicted below.

Global crude prices on the upswing
The steep price rise of petrol and diesel is a direct impact of the marked rise in global crude oil prices. Today’s Brent crude oil price of US$ 51.41 a barrel, considerably higher than the $18.38 a barrel on April 1, 2020 when the Covid-19 was peaking and transport and shipping operations worldwide were either in lockdown mode or minimal. However, the hapless Indian motorist never benefited from the record low prices of global crude oil. Will there be a price cut soon? The answer is blowing in the wind.