Rupee plunge, crude oil spike to give states Rs 22,700 crore windfall

Eileen GuzmanSep 12, 2018

On Monday, petrol prices touched Rs 88.12/litre in Mumbai, while diesel cost Rs 77.32 per litre in Mumbai. It is believed that that states such as Maharashtra, Madhya Pradesh, Punjab, Tamil Nadu, Andhra Pradesh, Rajasthan and Karnataka have the privilege to cut petrol prices by at least Rs 3 from their existing rates and Rs 2.5 on diesel.

On Monday, the petrol per litre in Andhra Pradesh were sold at Rs ₹ 85.60 and diesel at Rs 79.22 per litre. Likewise, the diesel price went from Rs 62.98 per litre in 2014 to Rs 79.98 at present. The price variation in different states is primarily due to Value-Added Tax. "While crude prices are plummeting in global markets, the increase of fuel prices in India is disheartening".

A day after the Congress and 21 other parties staged a nation-wide protest against fuel price hike and depreciation of the rupee and blamed the Narendra Modi-led NDA government for it, petrol prices on Tuesday breached the psychological barrier of Rs 90 in the BJP-ruled Maharashtra - a new record in India.

Nearly half of the retail selling price of the two fuels is made up of central and state taxes.

The VAT on petrol has been reduced from 30 to 26 per cent and from 22 to 18 per cent on diesel, Rajasthan Chief Minister Raje announced at a public gathering in Rawatsar in Hanumangarh district on Sunday.

The bench was hearing a PIL by Delhi-based designer, Puja Mahajan, challenging the daily rise in fuel rates and seeking a direction to the Centre to fix a fair price for petrol and diesel by treating them as essential commodities.

In Delhi, a litre of petrol cost Rs 80.87 and diesel cost Rs 72.97 - both marking an increase of Rs 0.14 per litre.

"A $1/barrel increase in oil prices, translates in a revenue of Rs 1,513 crore to all major (19) states", said the note authored by SBI's Group Chief Economic Adviser Soumya Kanti Ghosh. Mr Naidu in fact said that the central government had failed to reduce the price of petrol and diesel despite the fall in the price of crude oil in the global market.

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