The price of petrol in Mumbai, which hit Rs 79.99 per litre yesterday, is near the levels last seen in August 2014 in the country’s financial capital. The government intervention seems to have stopped it just short hitting the Rs-80 per litre mark, at least for now.
Three weeks after retail fuel prices did not relent despite the oil minister Dharmendra Pradhan predicting an easing out, the government cut basic excise duty on petrol and diesel by Rs 2 per litre in a move to provide some respite to the people from the inflationary impact. The cut in the excise duty is effective from today, Wednesday, 4 October 2017.
“To cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on Retail Sale Prices of petrol and diesel… and to protect the interest of common man, the government has reduced the basic excise duty rate on petrol and diesel (both branded and unbranded) by Rs 2 per litre,” the Central Board of Excise and Customs said in a statement yesterday.
Markets and minister
Earlier last week, FE Online had reported how petrol and diesel prices have continued to rise despite oil minister Dharmendra Pradhan having said two weeks ago that the retail fuel prices would ease out in few days. Since 13 September, petrol price in Delhi had risen by 50 paise per litre, and was at Rs 70.88 per litre in the capital as of yesterday, 3 October, 2017. The price of diesel has also seen a similar rise of 42 paise per litre since 13 September. Diesel was being sold in Delhi at Rs 59.14 per litre yesterday.
The price of petrol in Mumbai, which hit Rs 79.99 per litre yesterday, was near the levels last seen in August 2014 in the country’s financial capital. The government intervention seems to have stopped it just short hitting the Rs 80 per litre mark, at least for now. Similarly, the price of diesel was at three-year highs in the metro cities of Kolkata and Chennai at Rs 61.80 and Rs 62.30 per litre respectively.
A new dawn
However, after the excise duty cut, petrol price has fallen as much as Rs 2.5 per litre to Rs 68.38 per litre from today, Wednesday, 4 October, in Delhi at Indian Oil Corp petrol pumps, while that of diesel by Rs 2.25 per litre to Rs 56.89 per litre. Petroleum and petroleum products are the only commodities left out of the new GST regime implemented earlier this year in India. Central excise and state levies make up for more than half of the retail fuel prices in some cases.
Retail fuel prices in India have gradually aligned with the global crude oil prices and international retail fuel markets since the government freed up petrol pricing from its control seven years ago. The price of petrol was under the government control when the crude oil was at its peak.
Biting the bullet, the government deregulated the price of the fuel from its control in 2010, allowing the oil refining and marketing companies to set it in line with the market dynamics, specially crude oil prices. Then, earlier this year, the government introduced dynamic fuel pricing on June 16 — a mechanism for revising retail fuel prices daily across the nation in conjunction with the change in the crude oil prices.
Oil marketers not impacted
Oil minister Dharmendra Pradhan said earlier this month that the deregulation of retail fuel prices — beginning with petrol in 2010 and diesel in 2014 — and then the shift to daily revision in June 2017, is a consumer-friendly approach, and in their best interests. Despite the growing clamour for government intervention to bring down fuel prices, the minister had categorically refused to interfere in day-to-day functioning of oil marketing companies.
However, the government’s latest move lowers the prices of retail fuel without it having any impact on the oil marketing companies, but rather the government itself bearing the revenue loss of Rs 13,000 crore for the rest of the current financial year 2017-18.