India saw 16 fuel price hikes in June 2021

It’s now July and, thankfully, there has been no change in petrol and diesel prices for two days. The last hike to the two fossil fuels was on June 29, by 28 paise (petrol) and 24 paise (diesel).

• Excise duty remains the same on July 1 as it was on June 1
• Crude oil prices are not expected to fall anytime soon
• Value-Added Tax (VAT) has increased by 99 paise a litre on petrol

There were a total of 16 price hikes in June – the same as in May 2021 – which have increased the price of petrol in Mumbai by Rs 4.18 a litre and that of diesel by Rs 4.03 a litre. Fuel prices have been on a constant surge since May, after oil marketing companies (OMCs) resumed their price increases on May 4.

Take a close at the price table above for four metro cities in India and you will find that the increase is maximum for the motorist in Delhi (Rs 4.32 a litre), followed by Mumbai (Rs 4.18 a litre), Kolkata (Rs 4.14 a litre) and Chennai (Rs 3.81 a litre). Excise duty remains the same on July 1 – Rs 32.90 – as it was on June 1.

What the price build-up data reveals

Data for the price build-up of petrol in Delhi reveals that over a month, the base price of petrol has risen by Rs 3.3 a litre, which dealers are paying but make 3 paise more as their commission per litre, even as freight costs per litre remained the same at 36 paise. Value-Added Tax (VAT) has increased by 99 paise a litre.

On the diesel front, the build-up for the price increase in a month shows that the base price of this fuel has risen by Rs 3.25 a litre, VAT has increased by 54 paise a litre. Excise duty remains unchanged at Rs 31.80 a litre.

Highly taxed fuels

One of the reasons for the wallet-busting fuel prices is the high level of Central and State taxes. For instance, in Delhi, 33.29 percent (Rs 32.90) of the price of petrol per litre (Rs 98.81) is accounted for by excise duty. Add 23.07 percent VAT (Rs 22.80) to that and what you get is 56.36 percent (Rs 55.70) of the petrol price being tax. That’s what consumers will pay as tax when they tank on petrol in Delhi today.

It’s the same wallet-busting story with diesel but with a slight difference. Excise duty is more percentage-wise – 35.65 percent (Rs 31.80) while VAT in Delhi is 14.62 percent (Rs 13.04) of the retail price of Rs 89.18 a litre. Add excise duty and VAT –  Rs 44.84 – and they make up 50.28 percent of the final retail selling price of diesel in Delhi today: Rs 89.18 a litre.

Global crude prices firm up

The rise of petrol and diesel prices is a direct impact of the marked increase in global crude oil prices, which in turn is a result of the key global economies like the USA, Europe and China swinging back into work mode after the impact of the pandemic.

Brent crude oil is trading today at US$ 74.69, up from S70.35 a month ago on June 1. With these global trends, crude oil prices are not expected to fall anytime soon. So the Indian motorist will have to contend with sky-high petrol and diesel prices for some time, unless the Central government and State governments decide to reduce their taxes on the two fuels.

Also see:

Government to take a call on flex fuel engines in the next 8-10 days

Carmakers call for a long-term emissions road map

Petrol crosses Rs 100 per litre mark in Mumbai

Petrol, diesel price and tax break down in India