Petrol and Diesel Price @100 in India

 

Introduction

India is the 3rd largest fuel consuming country in the world.  The United Nations and China are in 1st and 2nd places, Japan and Russia are in 4th and 5th positions.  India’s daily oil consumption is approximately 4.5 million barrels, and the annual consumption is approximately 1650 million barrels.  And it is 4.6% of the world share.  India imports 82% of its total oil requirements from other countries.  India spent Rs: 8,81,282 crores and is nearly 125 billion dollars in 2018-19 financial year for its oil needs.  For 2019-20 oil bill fell by 9% to 102 billion dollars due to Covid outbreak at the end of 2019.  The expenditure on the oil is directly impacting on Indian oil market.

Petrol & Diesel @100 in India

In many states of India the petrol price crossed Rs: 100, and Diesel stood close to hundred mark.  States like Rajasthan, Andhra Pradesh, Telangana, Maharashtra and Tamilnadu etc. recorded the highest rise in petrol over Rs 100, and diesel prices reached hundred rupees. In Maharashtra diesel also crossed hundred.

Why Oil Prices Increasing in India

Petrol and Diesel prices have risen more than 40 times in the last six months.  The price of petrol and diesel has hiked sharply in 2021.  After recovering from Covid-19 the demand for crude oil increased globally.  Experts say this is one of the reasons for the crude oil price rise.  

There are two main reasons behind the fuel price rise in India. 

 

1. The first reason, OPEC(Organisation of the Petroleum Exporting Countries) reduced fuel production, after an increase of the demand for crude oil globally.  When demand increases and supply decreases it ultimately leads to an increase of price.  We can observe this in all crude oil importing countries.  

2. The second and main reason is Taxes on fuels by the Central and State Governments.  The original price of liter petrol is Rs 35.99 and Diesel Rs 38.49 (as per June 1st, 2021) at oil refineries.  But domestic taxes by the governments making Petrol and Diesel cost more than hundred rupees.  Central governments charge Rs 32.9 per liter on petrol and Rs 31.8 per liter on diesel as excise duty.  The state governments also charge many taxes like Value added tax VAT or sales tax.  In different states charging in different taxes on fuels, due to this reason prices of petrol and diesel slightly vary from one state to another.  In addition Rs 3.79 per liter petrol and Rs 2.59 per liter on diesel in Delhi are the pump dealer commission, and it varies from agency and location.  However, the dealer commission ranges from Rs 2 to 5 per liter

The Central Government grabbed more than Rs 3 lakh crore from fuel taxes during the financial year 2020-21. For the past six years the Central Government recorded more than 300% hike on petrol and diesel tax collection.  

Effects of rise in fuel Prices  

India is the largest importer of crude oil in the world.  India imports 82% of its oil needs.  The expenditure on crude oil directly affects the Indian economy.  As a result, inflation increases.  Oil price rise directly impacts goods and transportation. The products that are used by the people transported from different parts of the country.  With this cost of each item likely to rise, Especially food materials, vegetables and many other daily uses become more costly.