Respite for commuters, as fuel price hike on pause after 21-day rally

After a whopping 21 days of continuous hikes in fuel prices, after a 82-day hiatus period, oil companies decided to give the petrol, diesel price rally a rest on Sunday.

In the last raise in fuel prices, on June 27, petrol price was increased by Rs 0.25 per litre while diesel became costlier by Rs 0.21 per litre putting the cumulative hike, starting from June 7 at Rs 9.12 for petrol and Rs 11.01 for diesel.

While the price for diesel was hiked for the 21st time on Saturday, petrol prices were raised on 20 occasions in less than three weeks.

It was on June 7 that oil marketing companies restarted the revising prices in line with costs every day, following an 82-day hiatus amidst the ongoing coronavirus pandemic during which they adjusted steep excise duty hikes by the government against the fall in benchmark international oil rates.

In Delhi, diesel is now costlier than petrol and both fuels crossed the Rs 80-mark in the national capital.

Prior to the current rally, the peak diesel rates had touched was on October 16, 2018 when prices had climbed to Rs 75.69 per litre in Delhi. The highest ever petrol price was on October 4, 2018 when rates soared to Rs 84 a litre in Delhi.

Also Read: Consumer pays 275% in taxes on petrol to Centre, states

The government on March 14 hiked excise duty on petrol and diesel by Rs 3 per litre each and then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenue.

Currently, at the national capital, Delhi, Petrol costs Rs 80.38 a litre and diesel 80.40 per litre. Mumbai’s petrol prices touched Rs 87.14 a litre, while diesel went up to Rs 78.71 a litre. In Kolkata, the prices were at Rs 82.05 and Rs 75.52 a litre, respectively. In Chennai, petrol was at Rs 83.59 while diesel was selling at Rs 77.61.

Over 63 per cent of the retail selling price of the fuels is taxes. Rates of petrol, diesel differ from state to state, depending on the incidence of VAT.

Explaining the reason behind the spike in petrol and diesel prices, IOC chairman Sanjiv Singh told Mint that while the international demand has been picking up, the crude oil prices are also going up, simultaneously.

Retail prices of petrol and diesel in India track global prices of auto fuels, not crude, though they are broadly linked to the latter's price trends.

With lockdowns easing globally, oil prices have been up after April’s downward spiral, when low demand summed with supply glut led to a historical fall in the prices of crude oil.

Singh said that while IOC held the price increase during the lockdown the states contributed to the price increase.

However, with mounting excesses of bills and economic slump due to the coronavirus lockdown, state and union government took several measures, such as imposing liquor fees and VAT, to shore revenue.

Singh said that when the margins were running negative, following the standards was not workable. “That's the reason why a call was taken to hold the prices," he said and added, “Negative margins was something that we had never seen, so we had to hold the prices at certain level," according to the Mint report.

In protest of the 21 days of fuel price hikes, the Congress is supposed to hold mass protests across the country on Monday. All India Congress Committee General Secretary, organisation, K C Venugopal said, "On June 29, Congress workers, wearing masks and by maintaining social distancing norms, will sit on a two-hour dharna from 10 am to 12 noon at every district headquarter to protest against the unprecedented rise in the price of petrol and diesel and demand its rollback.”

Congress MPs, MLAs and leaders will be submitting memorandums to President Ram Nath Kovind demanding a rollback of the hikes.

(With inputs from agencies)