New Delhi: Petrol and diesel prices have been riding a 55-month high trajectory in India, with crude oil touching the $75 per barrel mark. However, more surprising is the fact that no change has been seen in petrol and diesel prices in the country since April 24. Some have linked the upcoming Karnataka Assembly election scheduled to be held on May 12 for steady pricing, even though the benchmark international rates have gone up by almost $2 per barrel. Despite volatility in international market, oil marketing companies in India, doing away from the practice of daily revision adopted on June 16, 2017, have not revised them.
Big fuel price freeze
The Brent crude oil price was $74.71 on April 23, while the petrol and diesel were priced Rs 74.63 per litre and Rs 65.93, respectively, in Delhi. Similarly, on April 25, the crude oil price was $73.23 a barrel, while petrol and diesel were priced at Rs 74.63 and 65.93 a litre, respectively, in Delhi. There has been no change in petrol and diesel prices (as the below mentioned graphic shows) since April 24 despite fluctuations in crude oil price in the international market.
The prices have remained constant with no revision across all metro cities – Delhi, Kolkata, Mumbai and Chennai – for over a week now. Today’s petrol price in Delhi is Rs 74.63, in Kolkata Rs 77.32, in Mumbai Rs 82.48 and in Chennai Rs 77.43 per litre.
Govt not ready to cut excise duty
Despite the high prices of petrol and diesel, the government has refused to reduce the excise duty on fuel. Though the benchmark international rate for petrol grew around $2 from April 24 to May 1, no upswing in the petrol price has been seen in India. On April 24, the benchmark petrol price was $78.84 a barrel, while the petrol price was Rs 78.63 a litre in India. The benchmark petrol price is $80.56 a barrel now but the petrol price is almost the same. The Opposition has been clamouring that the government has directed state oil companies to not raise prices, but Oil Minister Dharmendra Pradhan in April has junked the reports.
Why govt is not reducing excise duty
According to Economic Affairs Secretary Subhash Chandra Garg, every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore. And if the level of fuel prices does not go up, there is no reason for any tax cut, he opines. Finance Secretary Hasmukh Adhia in April had also ruled out any possible reduction in excise duty. The centre and states both have their share of taxes on petroleum products. Currently, the centre levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. States have value added tax (VAT), which varies from state to state. The BJP government at the centre has increased excise duty on petrol and diesel nine times between November 2014 and January 2016 – by Rs 11.77 a litre on petrol and Rs 13.47 a litre on diesel – but reduced it by Rs 2 a litre just once in October 2017.
Factors that could bring down prices
Economic affairs secretary Subhash Chandra Garg said there’s a possibility of fuel prices coming down in a few days. He hoped the improvement in geopolitical tensions across the Korean Peninsula, and the US shale gas boom could reduce the crude oil price, which has reached a three-year high. Garg also cited three reasons behind the recent fuel rally: less storage, international tensions at the business level, and tensions across Syria and the Korea Peninsula.