In the month of May 2021, fuel prices were hiked every alternate day. After witnessing a total of sixteen fuel price hikes, the month ended with all-time high prices in some metro cities of the country, stated Care Ratings report.
When oil marketing companies increases prices of fuel, taxes and duties also increase proportionately. This allows centre and states to make more revenue from this rise.
In the month of February as well, the same number of hikes were reported. In India’s financial capital, Mumbai, petrol prices created a fresh record by crossing Rs 100 per litre for the first time, while diesel prices inched towards Rs 92 per litre on May 31, stated Care Ratings.
Delhi witnessed petrol and diesel prices crossing Rs 94 per litre and Rs 85 per litre respectively, which refers to a cumulative hike of Rs 3.83/litre (petrol) and Rs 4.42/litre (diesel) for the month of May 2021.
Care Ratings stated, “... fuel prices were hiked 42 times during CY2021 (Jan-May), compared with just four reductions in the same period. In the start of the ongoing calendar year, petrol prices hovered at approximately Rs 84 per litre in Delhi, which at the end of five months rose by 12 per cent, while diesel prices which stood at approximately Rs 74 per litre on January 1, 2021, rose by 15 per cent as of May 31, 2021.”
Oil companies revise fuel rates based on the average price of benchmark fuel in the international market in the preceding 15- days and foreign exchange rates. Fuel prices differ from state to state depending on the incidence of local taxes such as VAT and freight charges.
The highest VAT on petrol is levied in Rajasthan, followed by Madhya Pradesh and Maharashtra. “...fuel prices have risen over the past 5 months, the taxes and duties have also increased proportionately. The government has been able to generate incremental tax revenues of Rs. 2.4/litre (petrol) and Rs. 1.6/litre (diesel) over the past 5 months in Delhi.”