Home BUSINESS Petrol price nears Rs 81-mark in Delhi, diesel retailing at Rs 72.97/litre

Petrol price nears Rs 81-mark in Delhi, diesel retailing at Rs 72.97/litre

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New Delhi: A day after the government said it cannot cut excise duty on petroleum products including petrol and diesel, rates for the same have been revised upwards. On Tuesday, petrol prices around the country were increased by 14 paise, taking its price close to Rs 81 in Delhi, while a litre of diesel was retailing at Rs 72.97 in the national capital.

No concrete roadmap has been shared by the authorities to reverse the situation despite the spiralling increase in prices of diesel and petrol, which has been touching new highs for the last six days. In Mumbai, petrol is retailing at Rs 88.26/litre while diesel rate has gone up to Rs 77.47/litre. The prices in Maharashtra are the highest due to the VAT collected by it on petrol and diesel.

Authorities have maintained their stance on the issue, suggesting that it is a temporary situation and is due to soaring crude oil prices and a weakennig rupee, which hit a new low of 72.67 against the dollar. In fact, the Indian rupee has depreciated 13 per cent so far in 2018 but staged a minor comeback as RBI intervened.

It is worth mentioning that petrol prices have increased almost Rs 2 per litre this month as Brent Crude futures, a benchmark for international crude oil prices, touched $80 per barrel.

The continuous depreciation of the rupee has also added to India’s oil pressure. Since India is the third-highest importer of crude oil, a commodity required to produce petrol and diesel, the falling rupee has increased cost of Indian imports.

Rising prices of fuel have become a grave concern for citizens who have been critical of the government for failing to intervene. The government, however, said it cannot cut excise duty on petrol and diesel as it “can’t afford” to take such a huge blow to revenue collections. The government has maintained its view that the “external factors” will ease out soon, following which fuel prices will come down.

With no action emanating from the Centre, two state governments—Rajasthan and Andhra Pradesh—have already cut VAT on petrol and diesel to provide some cushion. On the other hand, states such as Bihar, Kerala and Punjab are not even in a position to cut down VAT,  a senior government official told PTI on Monday.

Meanwhile, the opposition parties led by Congress held nationwide protests yesterday against record-high fuel prices in the country.

Responding to the criticism, the government cited data and said that petrol prices increased by 112 per cent during the 10 years of Congress-led UPA while the same figure was 13 per cent during the last four years of NDA rule. Government officials also pointed out that a Re 1/litre reduction in fuel prices will amount to a revenue loss of Rs 30,000 crore on an annual basis.

The rise in import cost will also have an impact on India’s current account deficit or CAD, which is expected to hit 2.8 per cent of the GDP in FY19, according to multiple reports.

India’s GDP widened to a four-quarter high of 2.4 per cent recently in the April-June period. Worth mentioning that a higher CAD will not only put the rupee under pressure but may also lead to a rise in the cost of overseas borrowing.

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