Petrol price surges to hit a new record of Rs 86.65 per litre in Delhi

Petrol prices hit a new record on Thursday in the national capital Delhi, the state-run oil companies hiked the petrol rates by 35 paise making the cost of one litre of petrol Rs 86.65 and the price of the diesel has also been increased by 35 paise per litre making the cost Rs 76.83 per litre. Since  January6, 2021 the rate of the petrol has been increased by Rs 2.94 per litre and diesel by Rs 2.96 per litre. Not only in the capital but the fuel prices have skyrocketed in several other metro cities as well.

Petrol price surges to hit a new record of Rs 86.65 per litre in Delhi
image source: National Herald

The current cost of one litre of petrol in Mumbai is Rs 93.20, Hyderabad Rs 90.10, Chennai Rs 89.13 and Kolkata Rs 88.01. Respectively the increased diesel price in Mumbai is Rs 83.67, Hyderabad Rs 83.81, Chennai Rs 82.04 and Kolkata Rs 80.41. The sudden rise in the fuel price could be alarming for the common people.

On the other hand, the oil prices have extended gain after the OPEC+ alliance stuck to a reduced output policy. But the rise in international crude prices alone cannot be blamed for the sudden skyrocketing fuel price in India. The other reasons for increased petrol and diesel prices are Central excise duty and states' Value Added Tax (VAT).

The Government has hiked the excise duty on petrol and diesel at the beginning of this fiscal in line with the reduced oil prices. Which in return has helped the Government increase its revenues, especially during Covid-19 pandemic when all the other tax revenues collections were hit hard.

According to Petroleum Planning and Analysis Cell (PPAC), the price of the petrol per litre is around Rs 26.34 and the rest are taxes, duty and dealer’s commission. The Centre in the Budget 2021 did not respond to calls to lower taxes on fuel despite the continuous escalation of the fuel prices. Instead, it introduced a new agriculture infrastructure development Cess (AIDC) on petrol, diesel and several other imported items. While the Centre clarified that the new Cess won't have any additional burden on consumers, states are most likely to lose revenue. The new Cess is Rs 2.5 per lire on petrol and Rs 4 per litre on diesel.