Your fuel bill woes are set to increase after petrol, diesel prices reached a record high. A look at the raging problem
Higher and higherPetrol prices touched a 16-year peak at Rs 76.57 per litre and diesel at Rs 67.82 on Monday. In Delhi, petrol prices were at Rs 76.06 per litre on September 14, 2013.Rates, however, vary from state to state considering local sales tax or VAT. Prices in Delhi are the cheapest compared to all metros and most state capitals. Mumbai pays the highest retail price for petrol among metros at Rs 84.40 per litre. Diesel was costliest in Hyderabad at Rs 73.45 a litre on Monday.
Burning a hole in your pocketThe oil marketing companies on Monday raised petrol and diesel prices by 33-34 paise per litre and 25-27 paise a litre, respectively. Monday was the eighth consecutive day of price increase since oil PSUs resumed daily price revisions after a 19-day gap on May 14 with the Karnataka polls out of the way.The hike in petrol price is the highest since the OMCs switched to the daily price revision mechanism last June.
Global hikeBrent, the international benchmark for oil prices, almost touched $80 a barrel, which is the highest level since November 2014. The current price is almost three times the cost in early 2016 when it was at $29 a barrel.
Tax burdenOver 50% of the retail price on petrol constitutes taxes and dealer commissions. For diesel, the corresponding figure is over 40%. Taxes vary across states and, hence, there are variations in the retail prices.
Dealers delightDealer commission, too, has seen an upward curve. Dealer commission currently constitutes a little over five per cent of the retail selling price of petrol.
High on excise dutyThe NDA government has raised excise duty on fuel nine times -- totalling Rs 11.77 per litre on petrol and Rs 13.47 on diesel -- between November 2014 and January 2016 in order to make the most from the global oil price fall past few years.
Major gainsThe government collects a lot of tax from POL products. The total tax collection from POL products was at Rs 4.63 lakh crore in FY17. Of this, the share of states' tax revenue was Rs.1.90 lakh crore, which amounts to 41%. The Centre pocketed Rs 2.73 lakh crore during the fiscal year.Excise duty on petroleum products was at Rs 9 per litre in 2013 when oil prices were $110 per barrel. Today it is Rs 19 per litre.
What lies aheadThe Finance ministry has estimated that rising oil prices may raise import bill by $25 billion to $50 billion. In FY18, India spent $88 billion on oil imports. At the start of the current fiscal year, the government had estimated a 20 per cent increase in the import bill to $105 billion.For government to control rising fuel prices, either it has to reduce excise duty or bring automobile fuels under the purview of Goods and Services Tax.