Record high domestic fuel prices in India have become a major concern for citizens as it is impacting their livelihoods, either directly or indirectly. While fuel prices have been high since last year, citizens are feeling the pressure since May after OMCs went on a hiking spree.
There has been a meteoric rise in domestic fuel prices since the first week of May. Petrol and diesel prices have been hiked 35 times during the period and both essential fuels have become dearer by at least Rs 7-8 per litre.
As of today, there are nearly two dozen cities where petrol is retailing over Rs 100 per litre including major cities and smaller towns. In Mumbai, a litre of petrol is currently retailing at almost Rs 106 per litre, while it is all set to cross Rs 100 per litre in Delhi for the first time.
Diesel prices are also rising rapidly across the country and there are hardly a few cities left where the retail rates are below Rs 90 per litre. In Rajasthan’s Sri Ganganagar, diesel price has crossed the three-figure mark. Check petrol and diesel rate in Sri Ganganagar
With no clear directive on resolving the fuel price crisis, Indians are likely to bear even higher costs in future if international crude oil rates strengthen.
The impact of high fuel prices is not just limited to vehicle owners; people who do not own a vehicle or even a business that requires the use of petrol and diesel are affected by rising fuel prices.
Fuel prices have a cascading effect on the value of many other commodities, including essential items like food, medicines and other FMCG goods. Simply put, an increase in fuel rates triggers a sharp rise in inflation and prices of several other essential goods and services go up as a result.
While vehicle owners have been forced to reduce their fuel consumption, people from poorer sections of society are finding it hard to even buy daily groceries — all because of higher fuel prices. It may be noted that diesel is the most-used auto fuel in India and is used by transport companies to deliver commodities over long distances. Therefore, an increase in transportation costs has made prices of other commodities and services expensive. Not just goods and services, the cost of public transportation has also gone up significantly since May. Transport companies who have been protesting non-stop against the rising fuel prices, said they have no choice but to pass on the hike to customers.
WHY ARE FUEL PRICES RISING?
Fuel prices have been rising in the country due to a gradual recovery in international crude oil rates. For the last few weeks, the recovery in global crude demand has accelerated, with benchmark Brent Crude Oil crossing $76 per barrel.
A recent meeting between the Organisation of the Petroleum Exporting Countries (OPEC) and its allies on oil output policy remained inconclusive. Another meeting of the energy alliance referred to as OPEC+ will be held today.
Without a consensus between the oil-producing countries, global oil rates could surge as production remains lower in comparison to rising output. India’s oil minister Dharmendra Pradhan has already requested OPEC to increase production and make oil prices “little sober”.
The outcome of the meeting will be crucial for a country like India which imports almost 80 per cent of its domestic oil needs. At the moment, the global situation is the only reason behind the rising oil prices in India.
However, there is another major factor behind costlier petrol and diesel in India — taxes. India levies the highest taxes on petrol and diesel in the world. Besides the central excise duty (Rs 32.90/litre), there is a dealer’s commission and value-added tax (VAT).
In some states like Madhya Pradesh, Rajasthan, Karnataka, Andhra Pradesh, Maharashtra and Telangana, petrol and diesel prices are higher than the national average due to higher VAT rates.
Simply put, more than half of what an individual pays for fuel — petrol or diesel — is tax.
