'Why Petrol is rising', the sudden surge in fuel prices

Amid growing concerns over the spiraling fuel prices, the retail prices of petrol and diesel were hiked again on Tuesday for the sixth time this month. This has propelled the prices to cross the Rs 100-a-litre-mark in places from Nanded in Maharashtra to Rewa in Madhya Pradesh to Jaisalmer in Rajasthan.

Petrol price was hiked by 27 paise a liter and diesel by 30 paise per liter, according to a price notification by state-owned fuel retailers. The hike took petrol and diesel prices to their highest-ever level across the country. In Delhi, petrol now comes for Rs 91.80 per liter and diesel is priced at Rs 82.36.

This was the sixth increase in prices since May 4, when the state-owned oil firms ended an 18-day hiatus in rate revision they observed during assembly elections in states like West Bengal.


Lack of uniformity in fuel prices:

In the country, fuel prices differ from state to state depending on the incidence of local taxes such as VAT and freight charges. For example, Rajasthan levies the highest value-added tax (VAT) on petrol in the country, followed by Madhya Pradesh. Sri Ganganagar district of Rajasthan had the costliest petrol and diesel in the country at Rs 102.70 per liter and Rs 95.06 a liter respectively. 

Also, in Rajasthan, petrol crossed the Rs 100-mark in Jaisalmer (Rs 100.71) and Bikaner (Rs 100.70) while it neared that mark in Barmer (Rs 99.82). Petrol in several districts of Madhya Pradesh, including Shahdol (Rs 102.06), Rewa (Rs 102.04), Chhindwara (Rs 101.67) and Balaghat (Rs 101.98) crossed the physiological mark. It neared that mark in Indore (Rs 99.90 a liter) and Bhopal (Rs 99.83). In Nanded district of Maharashtra, petrol was being sold at Rs 100.30.


How much the fuel prices have risen in the recent past?

The fuel prices have been hiked for the sixth time this month. In the recent past, petrol price has risen by Rs 1.41 per liter and diesel by Rs 1.63. After raising petrol price by a record Rs 21.58 per liter and diesel by Rs 19.18 since the government raised excise duty to an all-time high in March last year, state-owned fuel retailers, IOC, BPCL and HPCL had reduced petrol price by 67 paise a liter and diesel by 74 paise per liter effected between March 24 and April 15.


COVID-19 impact:

Justifying the taxes levied on petrol and diesel, the minister said that the Centre and the states are doing various developmental works in the wake of the Covid-19 pandemic, for which they collect taxes, adding that these development projects generate jobs.

"Another reason is Covid. We have to do various development work. For this, Centre and state governments collect the tax. Spending on development work will generate more jobs. The government has increased its investment and 34 per cent more capital spending will be done in this budget. State governments will also increase spending. This is why we need this tax but there is also the need for balance,’’. As fuel prices continue to rise, transparent pricing, based on market principles, will certainly help consumers.


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