The central government may slash taxes on petrol and diesel ahead of upcoming assembly polls in five states to provide the much-needed respite to consumers.
Petrol and diesel rates haven't risen for over a week, albeit the sporadic and minor increases in some cities. Meanwhile, consultations are on between the Centre and states to cut taxes on both the fuels.
Assembly elections in Assam, Kerala, Puducherry, Tamil Nadu, and West Bengal will get underway on March 27 and the outcome of the polls will be announced on May 2.
Soaring fuel prices are one of the key poll planks used by opposition parties in these states to corner the BJP (Bharatiya Janata Party).
Also Read: Petrol, diesel prices on hold in poll-bound Bengal; erratic in Tamil Nadu, other states
State-run oil marketers also seem to be going easy on oil prices, although Brent crude topped $70 per barrel recently. Fuel prices have continued to spiral over the past few months, with petrol breaching the psychological barrier of Rs 100/litre in states like Madhya Pradesh and Rajasthan, and diesel selling at Rs 80/litre across the country.
This has led to a significant rise in transportation costs, which in turn will make essential commodities dearer, stoking fears of inflation and the subsequent domino effect on the economic recovery.
Meanwhile, petrol and diesel prices were steady for the 11th consecutive day on Wednesday, March 10, while continuing to remain at their record highs across the country.
The fuel rates were last changed on February 27, when petrol was increased by 24 paise per litre and diesel price was hiked by 15 paise a litre in the national capital.
The prices have been on an upward spiral since February 9. In the 14 increases since then, prices have gone up by Rs 4.22 per litre for petrol while diesel has risen by Rs 4.34 a litre in Delhi. Petrol and diesel prices have increased 26 times in 2021 with the two auto fuels increasing by Rs 7.46 and Rs 7.60 per litre, respectively so far this year.
The rates, which vary from state to state depending on local sales tax (VAT), currently stand at Rs 91.17 a litre for petrol and Rs 81.47 for diesel in Delhi. In Mumbai, petrol is retailing at Rs 97.57, whereas diesel costs Rs 88.60, according to data available on the Indian Oil Corporation's website.
Also Read: Petrol, diesel prices at all-time high in Delhi, near Rs 100 per litre in this city
Meanwhile, keeping up the heat on the government, the opposition parties continued to protest against rising fuel prices in Parliament. Consequently, both the Lok Sabha and Rajya Sabha were adjourned for the second consecutive day on Tuesday, March 9.
The incessant rise in crude prices, if not curtailed, is likely to burden the government exchequer as India is heavily dependent on imports. India imports 80 per cent of crude oil and is third in terms of consumption. In FY19 and FY20, the Centre spent $111.9 billion and $101.4 billion, respectively, on crude oil imports, according to Petroleum Planning & Analysis Cell (PPAC) data.
Taxes on petrol and diesel are an essential revenue source for both the Centre and state governments. The overall revenue generated via taxes on fuel for both the Centre and states stands at Rs 5.5 lakh crore annually.
Oil ticked higher on Wednesday after falling for two straight sessions, with investors looking ahead to the US inventories data due later in the day for pointers on where prices will head next. Brent crude for May rose 15 cents, or 0.2%, to $67.67 a barrel by 0144 GMT, while U.S. West Texas Intermediate crude for April was at $64.24 a barrel, up 23 cents, or 0.4%. Prices gained support last week from the OPEC+ decision to largely maintain production cuts in April. They then initially jumped on Monday, with Brent rising above $70 a barrel, after attacks by Yemeni Houthis on Saudi's oil heartland.
Also Read: Petrol Rs 75, diesel Rs 68! That's what they will cost if under GST