Fuel prices, petrol and diesel alike, in India are now at an all-time high. Today, a litre of non-branded petrol in the capital costs Rs 76.87, while the same in Mumbai, Kolkata and Chennai will set you back by Rs 84.70, Rs 79.53 and Rs 79.79, respectively. That's one per cent higher than the previously gasp-inducing September 2013 levels, and around a whopping 900 per cent up in three decades. Yes, back in 1988, you'd get a litre of petrol for just Rs 8.
Meanwhile, diesel prices in Delhi stands at Rs 68.08 a litre, while the figures for Mumbai, Kolkata and Chennai are 72.48, Rs 70.63 and Rs 71.87, respectively. It is up by 25 paise - 27 paise in just one day.
It's not just the common man that is feeling the pinch. On Monday, India Inc. urged the government to cut excise duty on petrol and diesel prices immediately, observing that the spiralling oil prices pose a high risk to India's growth. In addition, industry bodies FICCI and Assocham also pitched for the inclusion of both fuels under the ambit of the goods and services tax (GST) as a long-term solution to rising prices.
"With global oil prices once again spiralling upwards, the macro-economic risks of higher inflation, higher trade deficit and pressure on balance of payments with attended consequences for the rupee value have once again surfaced," said FICCI president Rashesh Shah, adding that the weakening rupee will further add pressure on the import bill. For the record, according to the Petroleum Planning and Analysis Cell's (PPAC) data, the Indian basket of crude averaged $69.30 per barrel in April, up 3 per cent since January this year, but has already shot upwards of $72 a barrel in the current month, and counting. And the rupee has depreciated 6 per cent against the dollar this year.
Shah also pointed out that there is a risk of the monetary policy turning hawkish, which would, in turn, have a bearing on growth of private investments. "At a time when Indian economy is on a recovery path, rising oil prices are again posing high risk to India's economic growth trajectory," he cautioned.
According to him, unless swift action is taken to address the situation, economic growth will again head towards a speed breaker. "Among the most immediate actions that can be taken by the government is to bring down the excise duty on fuel," he said, adding that the centre should also work with states to bring petrol products under the GST regime.
In a similar vein, Assocham secretary general D.S. Rawat said that the rising crude prices coupled with the weaker rupee and the cascading impact on inflation pose a big challenge for the Indian macro picture. According to him, while a cut in excise duty on petrol and diesel may provide temporary relief to consumers, "the sustainable solution lies in the automobile fuel coming under GST, which can happen only after the Centre and the states together reduce their dependence on the fuel considerably".
What he means is that the Centre as well as the state governments rely heavily on taxing fuels to fill their coffers. According to the IndianOil Corporation, the rate charged to dealers for petrol in Delhi today is just Rs 37.43 per litre. But when you add in excise duty at Rs 19.48 per litre, dealer commission at Rs 3.62 per litre on average and total VAT at Rs 16.34 per litre, the retail selling price goes up by 105 per cent.
In the meantime, Brent crude futures again inched up today, going up 17 cents from their last close to $79.39 per barrel. Brent had breached the psychologically important $80 per barrel mark last week and the Modi government admitted on Friday that this could inflate import bill by as much as $50 billion - India spent $72 billion on oil imports last year - and impact current account deficit (CAD). But it remains firmly non-committal on intervening with an excise duty cut a second time. The only time the current government has done so was in October 2017, when fuel prices were far lower, but it hiked excise duty on fuel nine times between November 2014 and January 2016, despite global oil prices being significantly lower than current levels.
If the spiralling fuel prices wrecking your monthly budget, you could always consider shifting to Port Blair till the government makes up its mind. A litre of petrol currently costs "just" Rs 66.26, a level last seen in the rest of the country in 2017.
With agency inputs