Petrol price in Mumbai on Monday touched Rs 80 per litre first time since August 2014, on back of higher crude oil prices due to global geopolitical risks, higher demands and production cuts, while the diesel price in Mumbai today is Rs 67.10 per litre. In Delhi, the petrol price today is Rs 72.23 per litre and diesel price Rs 63.01 per litre. The petrol price rose by 15 paise on Monday even as Brent crude oil was trading 69 cents lower at $68.53 a barrel on Friday. However, on Monday, it was up to $68.84 per barrel.
The petrol and diesel prices in Kolkata are Rs 74.94 per litre and Rs 65.67 per litre, while in Chennai, they are Rs 74.91 per litre and Rs 66.44 per litre. The impact of excise duty cut of Rs 2 per litre on both petrol and diesel — announced on October 3 when petrol price in Mumbai was Rs 79.99 per litre — has been completely reversed due to the steep rise in the crude oil prices. In fact, post excise duty cut, the Maharashtra government also had cut Value Added Tax (VAT) by Rs 2 per litre on petrol and Re 1 per litre on diesel.
The Brent Crude oil price is expected to touch $80 per barrel in 2018 and $100 by 2019, according to market analysts, which also means that the fuel price in India is going to rise further, unless there is some government intervention.
The Narendra Modi government announced an excise duty cut of Rs 2 per litre on both petrol and diesel on October 4, just before the petrol price in Mumbai was just 1 paisa short of hitting Rs 80 per litre. As a result, the fuel prices fell by Rs 2.5 per litre. The government hiked excise duty on both petrol and diesel by Rs 12 per litre and Rs 13.77 between April 2014 and October 2017.
According to reports, the oil ministry recently indicated that the government may review the excise duty being levied on retail fuel when, and if, crude oil price touched $75 per barrel. As the Brent crude oil price is expected to rise further, one can expect petrol and diesel prices to go up as well — not quite pinching after daily revision kicked in, which allowed hike in prices in few paise every day, instead of big fortnightly hike.
As the fuel price is rising, the demand for bringing it under the Goods and Services Tax (GST) has been increasing. While the GST Council is likely to discuss bringing petrol and diesel under the GST, it may take some time.
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The rising crude oil price is likely to upset the fiscal math of Finance Minister Arun Jaitley. Moreover, it is further going to push up the inflation, which has already breached Reserve Bank of India’s 4% target. With rising oil prices, the repo rate cut by the central bank also looks unlikely, further impacting country’s investments and production cycle.