Petrol, diesel become cheaper in Delhi than UP

Petrol and diesel are now cheaper in Delhi as compared to adjoining cities of Uttar Pradesh after the Yogi Adityanath government in the neighbouring state raised taxes on the two fuels.

While petrol and diesel traditionally have been cheaper in Delhi than most states in the country due to lower local sales tax or VAT, the October 5, 2018, cut in the VAT by BJP-ruled states, including UP, resulted in both fuels turning cheaper in places such as Ghaziabad and Noida -- the UP towns that adjoin the national capital.

However, this has now been reversed after the UP government raised VAT on petrol and diesel with effect from Tuesday.

Petrol in the national capital costs Rs 71.84 per litre and diesel is priced at Rs 65.11 a litre, according to daily price notification of Indian Oil Corp (IOC), the country's largest oil firm.

In adjoining Noida, petrol costs Rs 73.79 per litre and diesel is priced at Rs 65.40. In Ghaziabad, petrol costs Rs 73.65 per litre and diesel Rs 65.26, according to IOC.

On August 19 before the VAT on the auto fuel was raised, petrol in Noida was priced at Rs 71.44 and cost Rs 71.30 in Ghaziabad. This compared to Delhi price of Rs 71.84 per litre.

Similarly, a litre of diesel in Noida came for Rs 64.47 and Rs 64.34 in Ghaziabad on August 19 as compared to Delhi price of Rs 65.18.

The Uttar Pradesh government hiked VAT on petrol to 26.80 per cent or Rs 16.74, whichever is higher. On diesel, VAT was increased to 17.48 per cent of Rs 9.41 per litre.

The hike restores the duties BJP-led government in the state had cut following Centre's call to states in October last year to lower taxes to give consumers cushion against rising oil rates at that time.

The Union government had on October 4, 2018, slashed the petrol and diesel price by Rs 2.50 by reducing excise duty and asking state-owned oil firms to bear subsidy. This was matched by several states which reduced local sales tax or VAT.

While AAP-ruled Delhi had not cut taxes, BJP-ruled UP followed suit. It cut VAT on petrol to 23.78 per cent or Rs 14.41 a litre, whichever is higher from 26.80 per cent of Rs 16.74, whichever is higher. In the case of diesel, VAT was reduced to 14.05 per cent or Rs 8.43 a litre, whichever is higher from 17.48 per cent or Rs 9.41 a litre.

The union government had itself raised excise duty on petrol and diesel by Rs 2.50 per litre last month to more than make up for the reduction in taxes it had effect in October 2018. In October last year, it had cut excise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil firms to absorb Re 1 a litre.

Oil firms, however, recouped the Re 1 subsidy when oil prices started to fall in subsequent weeks.

According to a review of fuel prices, the difference in rates between Delhi and adjoining cities in Uttar Pradesh had peaked to over Rs 3 per litre in case of petrol and about Rs 2.3 in diesel on October 5, 2018.

Petrol in Delhi is cheaper than even Gurugram (Rs 71.99 per litre) and Faridabad (Rs 72.18) in Haryana. Diesel, however, is cheaper in Haryana with a price of Rs 64.53 per litre in Gurugram and Rs 64.72 in Faridabad.