Within a day of the one-off excise duty cut and PSUs subsidising fuel, petrol and diesel prices are on the rise again and have hit a three week high.
Petrol and diesel prices were cut by a minimum ₹2.50 on October 5 when the government’s only second cut in excise duty of ₹1.50 per litre and State-owned fuel retailers providing a ₹1 per litre subsidy came into effect. In BJP-ruled States, the reduction was higher as they matched the cut with a similar reduction local sales tax or VAT.
But the prices were on the rise from the very next day. Petrol price was hiked by 18 paise a litre on October 6 and 14 paise on Sunday, according to daily price notification issued by state-owned oil firms.
Petrol, which in Delhi was cut to ₹81.50 on October 5, on Sunday costs ₹81.82.
Similarly, diesel rates are hiked by 29 paise a litre each on October 6 and Sunday. It costs ₹73.53 per litre in Delhi, up from ₹72.95 on October 5, according to the oil firms.
Delhi, which did not cut VAT on fuel, still has the cheapest fuel in all metros and bulk of state capital as it levies lower taxes. Mumbai despite reducing VAT on petrol still has the highest priced fuel.
Petrol in Mumbai sells for ₹87.29 a litre on October 7 and diesel is priced at ₹77.06.
Petrol prices had hit an all-time high of ₹84 per litre in Delhi and ₹91.34 in Mumbai on October 4. Diesel rates too had peaked to ₹75.45 a litre in Delhi and ₹80.10 in Mumbai. Following the twin decision, they fell to ₹81.50 per litre of petrol in Delhi and ₹86.97 in Mumbai.
Diesel rates fell to ₹72.95 in Delhi and ₹77.45 in Mumbai on October 5.
On Sunday, the rates hit a three-week high.
Private retailers like Nayara Energy, formerly known as Essar Oil, too are matching PSU rates by subsidising fuel by Re 1 a litre.
After the Centre cut excise duty by ₹1.50 per litre and asked PSU oil firms to subsidise fuel by Re 1, Maharashtra and Gujarat governments were among the first to announce a matching ₹2.50 cut.
They were later joined by Chhattisgarh, Jharkhand, Tripura, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Haryana Assam, Uttarakhand, Goa and Arunachal Pradesh with similar moves. Jammu and Kashmir, which is under governor’s rule, too reduced tax on the two fuel.
Maharashtra, however, reduced VAT only on petrol and not on diesel.
Even before the excise duty cut, Rajasthan, West Bengal, Karnataka, Kerala and Andhra Pradesh had last month reduced VAT to cushion consumers for a spate of price increases.
The reduction in excise duty, only the second in four years of BJP-led NDA rule, will dent central government revenues by ₹10,500 crore and was aimed at cooling retail prices that had shot up to an all-time high.
The BJP-government at the Centre had raised excise duty on petrol by ₹11.77 a litre and that on diesel by ₹13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by ₹2 a litre.
Prior to Friday’s cut, petrol price had risen by ₹6.86 a litre and diesel by ₹6.73 since mid-August — the most in any six-week duration after the daily price revision was introduced in mid-June last year.
Industry sources said for State-owned fuel retailers absorbing ₹1 per litre price would mean a ₹9,000 crore hit on profits on an annualised basis. For the remainder of current fiscal, it would be ₹4,500 crore, with IOC’s share being roughly half and the rest is split equally between HPCL and BPCL.
Almost half of the fuel price is made up of taxes. The Centre, prior to the excise duty cur, levied a total of ₹19.48 per litre of excise duty on petrol and ₹15.33 per litre on diesel. On top of this, states levy value-added tax (VAT).
The hike in duties in 2014-16 had led to excise collections from petro goods rising from ₹99,184 crore in 2014-15 to ₹2,29,019 crore in 2017-18. States saw their VAT revenue rise from ₹1,37,157 crore in 2014-15 to ₹1,84,091 crore in 2017-18.
