Petrol and Diesel prices Hike Consecutively: Talking To Gulf Countries Says Petroleum Minister

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NEW DELHI: Petrol and diesel prices hike is noticed for the seventh consecutive day across the nation on Monday. The latest increase has pushed fuel prices across the nation to their new high.

Petrol and Diesel prices Hike

Petrol and Diesel Prices 

With the hike of ₹0.35, the price of petrol increased to ₹107.94 per litre in the national capital while the price of diesel went up to ₹96.67 per litre with an increase of 35 paisa, too.

Prices differ from state to state, depending on the incidence of local taxes. There was no change in rates on October 18 and 19, prior to which prices were hiked by 35 paise per litre each on four straight days and post October 19 it’s the same suituation.

The costliest fuel was in the border town of Ganganagar in Rajasthan, where petrol comes for ₹119.79 a litre and diesel for ₹110.63 per litre.

While petrol has already hit the ₹100-a-litre mark or more in all major cities of the country, diesel has touched that level in over one-and-a-half dozen states and UTs from Jammu and Kashmir to Tamil Nadu. West Bengal on Sunday became the latest state to have the nation’s most used fuel above that level.

Here Are The Petrol And Diesel Prices Across The Metro Cities:

City Petrol Diesel
Delhi 107.59 96.32
Mumbai 113.46 104.38
Chennai 104.52 100.59
Kolkata 108.11 99.43

Source: Indian Oil

Why Is Petrol and diesel Prices On Fire?

There are so many reasons that cause the hike in the prices of petrol and diesel. The global demand for crude oil has increased in 2021 resulting in a sharp rise in prices. Another reason for a sharp increase in international oil prices is the supply restrictions maintained by the OPEC grouping nations.

The second wave of Covid-19 hit India this year and left economic devastation for us. The central and state governments have hiked taxes on fuels, pushing retail fuel prices to record highs in most of the country.

Due to the pandemic, these oil producing economies continue with slow production increases leading to a rise in oil and gas prices. Prices of petrol and diesel in India are pegged to a 15 day rolling average of the international prices of these fuels. And the high taxes by the central and state governments too have contributed to fuel retail prices being far higher in India.

Central Levies Like Excise Duty

The total increase in petrol price since the May 5, 2020 decision of the government to raise excise duty to record levels now totals ₹35.98 per litre. Diesel rates have during this period gone up by ₹26.58 per litre.

The government has raised excise duty on petrol and diesel to mop up gains that would have otherwise accrued to consumers from international oil prices crashing to as low as USD 19 per barrel.

While international prices have since recovered to USD 85, excise duty has remained at ₹32.9 per litre on petrol and ₹31.8 on diesel, according to the reports.

Oil minister Hardeep Singh Puri on Friday equated demand for cutting excise duty to ‘axing one’s own feet’, saying such levies funded government schemes to provide free Covid-19 vaccines, meals and cooking gas to millions amid the pandemic.

“I think this simplistic political narrative we get in India, ‘prices have gone up, why don’t you reduce your taxes’…. so every time prices go up due to something else, it says you axe your own feet in the process,” he had said late on Friday.

Opposition parties including Congress have been critical of the government over the price hikes and have demanded a reduction in taxes. Meanwhile, Congress said that it will launch massive agitation against fuel price hike from November 14-29.

“It’s only the greed of the government which has given rise to petrol and diesel prices. That is why the RBI says pump prices deserve lower taxation. RBI is repeatedly telling the government that pump prices must be reduced,” Congress leader P Chidambaram said, according to reports.

Petrol and diesel prices are calculated by the OMCs depending on crude oil prices across the globe, among many other factors. Crude oil prices were on the rise extending pre weekend gains, according to the reports. In the United States, the price of crude oil was at a seven year high as global supply remained tight amid strong demand across the globe amid the pandemic.

State-run oil refiners such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum revise the fuel rates on a daily basis, by taking into account the crude oil prices in the international markets, and the rupee-dollar exchange rates. Any changes in petrol and diesel prices are implemented with effect from 6 am every day.

A year of economic disruption caused by the Covid-19 pandemic and record high fuel prices has brought the union to its knees. The business has dried up in an economy that hit it’s worst performance in 74 years since India’s independence. Most of the money is getting spent on petrol and diesel. The government is hiking diesel prices on a daily basis.

Taxes Behind High Fuel Prices In India

Prices of petrol and diesel are public sector oil marketing companies including Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum determine retail prices of petrol and diesel based on international prices of crude oil and other related products.

International prices are thus the determinants of prices of petroleum products in India as per the ministry. It is said that high fuel prices in India were due to rising global crude oil prices. The determinants of petrol and diesel prices in India are central and state government taxes.

The Impact

 India imports a major portion of its fuel needs; it requires more dollars to purchase crude oil resulting in a reduction of liquidity.

The rupee is moving towards the Rs.75 per dollar mark which will result in imported goods tending to be more expensive. As the chain of coal decreased, this in turn has increased the demand for oil in the international market.

Brent crude oil import accounts for nearly 20% of India’s import bill. A sharp surge in Brent crude oil prices can create short term panic in the equity markets as well.

The impact of fuel hikes is visible on the stock market also with growing fears of inflation, impact on currency value and input costs to companies. The petrol and diesel price hike is burning a hole in our pockets. And the government seems to have no control on this.

Effect On People

High fuel prices have pushed inflation up in the country. Earlier due to Covid-19, people have used all their savings and pushed into debts and poverty. And now, the money that they are earning is cutting for the fuels. People are cutting back expenditures on essentials such as health and groceries in order to pay for fuel.

The RBI also recently called for a reduction in taxes on petrol and diesel by central and state governments. It is an indirect tax on a commodity consumed by both rich and the poor, so the burden on the poor is more than the rich because the tax is not calculated based on the income of the buyer.

Schools, colleges, companies all are opening up again, students, who largely run their vehicles from their pocket money, are also in a fix wondering how to cope up with this. The use of transportation is increasing now. It affects professionals, particularly those who are required to commute a lot. We can’t avoid traveling and at the same time, our salaries are not good enough to meet the expenses. Petrol and diesel are essential commodities. The central and the state government should work on this and reduce taxes on petrol and diesel.

Small Transporters Face Closure

 The high price of fuel is affecting pandemic stressed sectors in the economy, such as transportation and logistics. Fuel price hikes are easy money for the government but a slow poison for us.

On one hand we are saying that for any economy, for any country, transporters form the backbone. But here we are observing, the way diesel prices are increasing, most of the small truckers in this country will just vanish. And we know that the transport sector provides direct and indirect employment to millions of people. The number of small scales is high so it will create a pathetic situation where large sectors would start monopolizing the sector.

As the prices of these crude oils increase, the transportation costs also goes up, with this the prices of fruits, vegetables and all other commodities are also going high and affecting the livelihood of thousands.

India has seen a faster recovery in the consumption of petrol than of diesel after pandemic related restrictions with petrol consumption. India was expected to go up in the next few months with the upcoming festive season set to accelerate the economic recovery and push up diesel consumption.

By Bindu Kumari





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