State hikes petrol, diesel prices

The state government on Friday hiked fuel prices by increasing the rate of sales tax on petrol and diesel to 32% and 21% respectively. The government has cited loss of revenue due to fall in crude oil prices in the international market in recent days.

But, ironically, the decision to hike fuel prices comes at a time when crude oil prices are actually going north. Brent crude cost $ 57.2 per barrel on Friday, an increase of $1.25 compared to the previous day. The trend will continue as Saudi Arabia, one of the largest producers of crude, is tightening supplies.

Petrol in Karnataka will cost Rs 70.84 a litre and diesel Rs 64.66 a litre (may vary slightly in different cities depending on transportation cost) and will come into immediate effect.

In effect, the sales tax rates on petrol and diesel have been revised to what was prevailing prior to Sept 17 last year rolling back the Rs 2 relief per litre which the state government had passed on to consumers.

According to the Chief Minister’s Office, crude prices in the international market have been falling continuously, reducing the base price of the fuels and hitting revenues.

As a result, the base price of petrol and diesel has come down substantially causing an adverse impact on the state revenue collection.

The CMO stated that despite the revision, the retail price of petrol and diesel in Karnataka is lower compared to neighbouring states. Petrol in Tamil Nadu (Hosur) and Kerala (Kasaragod) costs Rs 72.87 and Rs 71.16 respectively, the release states.

The coalition government on July 15 had increased sales tax on petrol and diesel from 30% to 32% and from 19% to 21% respectively primarily as a part of additional resource mobilisation measure to fund its ambitious crop loan waiver scheme. However, on September 17, it reduced prices on the fuels by Rs 2 per litre following a public demand.