Petrol, diesel price hikes: Oil rates have halved since 2014, but retail ones not falling; here is what really happened

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Published: September 23, 2017 4:47:19 AM

Even though global oil prices have halved since June 2014, retail prices of petrol and diesel in India have remained more or less unchanged since then.

Even though global oil prices have halved since June 2014, retail prices of petrol and diesel in India have remained more or less unchanged since then. Even though global oil prices have halved since June 2014, retail prices of petrol and diesel in India have remained more or less unchanged since then.

Even though global oil prices have halved since June 2014, retail prices of petrol and diesel in India have remained more or less unchanged since then. High central and state taxes have offset any easing of prices that could have been possible because of the reduction in crude prices. For instance, in Delhi, the central excise duties and state VATs comprise around 52% of the retail price of petrol and around 44% of diesel’s. VAT rates vary across states, from 20% in Mizoram to as much as 48% in Maharashtra on petrol. In case of diesel, it varies between 12% in Mizoram and 38% in Madhya Pradesh.


While the central taxes are on the basis of “per litre (specific)”, state taxes are ad valorem and would tend to increase the final retail price when the base crude oil price changes. At a time when the economy is slowing, part of the money collected by the government via taxing petro products is being utilised to fund capital expenditure, especially for building roads and welfare projects in the country. A uniform, pan-India tax mechanism will benefit people. In fact, oil minister Dharmendra Pradhan has requested the ministry of finance to bring petroleum products under the ambit of the Goods and Services Tax (GST). At present, only petro-products like LPG, naphtha, butane/propane, petroleum coke have been brought under GST.

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