NEW DELHI: Fuel prices are on fire once again as petrol has shot up to Rs 102 per litre in parts of Rajasthan and Madhya Pradesh. Elsewhere too the prices were in sight of hitting a century and diesel made new records after fuel retailers raised prices for the fourth straight day on Friday.
This is the second century for petrol this year. Petrol price had crossed the Rs 100 per litre mark for the first time on February 17 in Sri Ganganagar district of Rajasthan, which has the highest VAT in the country.
In the last four days since the retailers resumed daily price revisions, petrol has risen 88 paise per litre and diesel Re 1, erasing the reductions between March 24 and April 15. On Friday, petrol sold for Rs 102.15 a litre in Sri Ganganagar, Rs 101.86 in Anuppur, Madhya Pradesh and Rs 99.95 in Parbhani, Maharashtra.
Pump prices are rising because state-run fuel retailers, who control 90% of the market, have started passing on the increase in crude prices since April 27. Crude prices are hovering just below $70/barrel, boosted by demand from the US and China. The high Central and state taxes are hardening the pinch for consumers. Taxes account for 60% of the retail price of petrol and 54% of diesel. The Centre levies an excise duty of Rs 32.90 per litre on petrol and Rs 31.80 on diesel.
The retailers, who technically enjoy a ‘free hand’ on pricing, were informally told by the government to hold the price line after petrol prices rose to Rs 100 in several parts of the country ahead of the state elections, giving the opposition a stick to beat the BJP with. Poll-bound West Bengal and Assam were among five states that reduced VAT as a relief to consumers as the Centre refused to prune excise duty. The Centre instead blamed rising crude for record fuel prices.
The Centre had in 2020 raised excise duty on petrol cumulatively by Rs 13 per litre and diesel by Rs 16 in two tranches on March 16 and May 5 when crude prices collapsed as the Coronavirus pandemic shut down economies. Fuel retailers adjusted the increased excise against higher margins resulting from cheaper crude and did not revise pump prices. But as states followed the Centre’s example and raised VAT, retailers raised prices. Yet, consumers largely remained unaffected since only essential service vehicles were out on roads.