A combination of high crude prices and depreciating rupee led to another surge in fuel prices on Wednesday with the petrol being sold at Rs 82.22 per litre in the national capital and Rs 89.60 per litre in Mumbai, according to news agency ANI. The 6 paise increase came after a one-day hiatus with the prices remaining unchanged on Wednesday.
The diesel prices, however, remain unchanged which was sold at Rs 73.87 per litre in Delhi and Rs 78.42 in the financial capital.
If the unabated rise in fuel prices continues further, petrol price will soon touch the psychological mark of Rs 90 in the financial capital. In fact, in as many a dozen cities in Maharashtra, petrol is already is selling between Rs 90 and 91 a litre.
The Maharashtra government is considering increasing excise duty on Indian-made foreign liquor (IMFL), so as to create some fiscal space for slashing the tax on petrol and diesel, PTI quoted an official as saying on Wednesday.
Petrol price has since risen by Rs 5.08 per litre and diesel by Rs 5.15 — the most in any one-month period since the daily revision in fuel prices was introduced in June last year.
Delhi has the cheapest fuel rates among all metros and most state capitals because of lower taxes. Mumbai has the highest sales tax or value added tax (VAT).
Price of Brent crude, benchmark for half the world’s oil including India’s, was hovering around USD 80 per barrel while rupee traded at 72.8112 to a US dollar Tuesday, nearing a record low of 72.9138 touched last week. India is 81 per cent import dependent to meet its oil needs.
While the spiralling oil prices are strengthening people’ demand for Centre’s intervention, the government – attributing the price hike to depreciating rupee and other global factors – has remained mum on the possibility of cutting on excise duty on petrol and diesel prices. According to sources, the government estimates a revenue loss of Rs 28,000 crore to Rs 30,000 crore with a reduction of Rs 2 per litre on petrol and diesel.
However, few states, including have announced reduction in VAT imposed on fuel prices. Karnataka on Monday announced a cut of Rs 2 per litre on petrol and diesel prices. Earlier, Rajasthan, Andhra Pradesh and West Bengal announced a reduction of Rs 2.5, 2 and Re 1 on fuel prices respectively.
Estimating the ‘real’ effective depreciation of rupee at 6 to 7 per cent, the International Monetary Fund (IMF) has said that the depreciation will “obviously raise the prices of imported goods such as oil and petroleum products, potentially putting an upward pressure on inflation”.