Fuel Prices: 19 hikes in a row take diesel past Rs 80-mark in Delhi, petrol at Rs 79.92 per litre
New Delhi | Jagran Business Desk: With the fuel prices witnessing hike for the 19th day in a row, the retail rates of diesel crossed Rs 80-mark in Delhi - the highest ever recorded in the national capital. This is the first time in history that diesel is sold at a higher price than petrol in Delhi.
On Thursday, diesel prices in Delhi increased by 14 paise taking the cost for a litre to Rs 80.02. Meanwhile, the petrol price in the national capital stood at Rs 79.92/litre after a hike of 16 paise.
Rates differ from state to state depending on the incidence of VAT. However, diesel is costlier than petrol only in the national capital where the state government had raised local sales tax or VAT on the fuel sharply last month.
Ever since Oil Marketing Companies (OMCs) restarted revising fuel prices on June 7 after an 82-day-long hiatus, petrol and diesel prices rose by Rs 8.5 and Rs 10.49 per litre, respectively.
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Traditionally, diesel was priced Rs 18-20 a litre lower than petrol due to lesser taxation. But over the years, the taxes have increased, narrowing the gap.
The Delhi government had on May 5 hiked Value Added Tax (VAT) on diesel from 16.75 per cent to 30 per cent and on petrol from 27 per cent to 30 per cent. Since the levy is ad valorem, the actual incidence has gone up every single time oil companies raised retail selling price in the last 19 days.
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The increase in rates since June 7 is the highest in any fortnight. When petrol and diesel pricing was deregulated in April 2002, oil companies revised rates every fortnight in line with the cost. They switched to daily price revision in May 2017 to allow cost to reflect instantaneously in retail rates.
According to pricing data, the maximum rates have increased in any fortnight was Rs 4-5 per litre.
Prior to the current rally, the peak diesel rates had touched was on October 16, 2018 when prices had climbed to Rs 75.69 per litre in Delhi. The highest ever petrol price was on October 4, 2018 when rates soared to Rs 84 a litre in Delhi.
When rates had peaked in October 2018, the government had cut excise duty on petrol and diesel by Rs 1.50 per litre each. State-owned oil companies were asked to absorb another Rs 1 a litre to help cut retail rates by Rs 2.50 a litre.
Oil companies had quickly recouped the Re 1 and the government in July 2019 raised excise duty by Rs 2 a litre.
Taxes make up for nearly two-third of the retail selling price. As much as Rs 50.69 per litre, or 64 per cent, in petrol price is due to taxes - Rs 32.98 is the central excise duty and Rs 17.71 is local sales tax or VAT.
Over 63 per cent of the retail selling price of diesel is taxes. Out of the total tax incidence of Rs 49.43 per litre, Rs 31.83 is by way of central excise and Rs 17.60 is VAT.
The 82-day freeze in rates this year was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.
The government on March 14 hiked excise duty on petrol and diesel by Rs 3 per litre each and then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenues.
Oil PSUs Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) instead of passing on the excise duty hikes to customers adjusted them against the fall in the retail rates that was warranted because of fall in international oil prices to two decade low.
International oil prices have since rebounded and oil firms are now adjusting retail rates in line with them.
(With PTI inputs)
Posted By: Abhinav Gupta