Petrol, diesel prices steady for 18 days. Any chance for a hike again?

Prices of petrol and diesel are steady across the country for 18 days in a row. The last price revision for the petrol and diesel prices were announced on April 15. At the beginning of the year, since February the fuel prices shot up to a new record level. The price hike was continuing before the announcement of the assembly elections in four states. However, with the assembly elections over now, there might be a chance of a price hike again.

Currently, petrol is priced in Delhi at ₹90.40 per litre, while diesel is priced at ₹80.73 per litre. Mumbai is the city with the highest rate for petrol and diesel. The financial capital of the country is selling a litre of petrol at ₹96.83. A litre of diesel in the city is sold at ₹87.81.

Petrol and diesel prices are fixed on the basis of different components, which include freight charges, local taxes, VAT and dealer commission. Currently, in Delhi, the base price of petrol is ₹32.67 per litre with a freight charge of ₹0.28 per litre. Dealers are charged ₹32.95 per litre, with an excise duty of ₹32.90 per litre is added to the same. Dealer commission of ₹3.69 per litre is added to the retail price, along with ₹20.86 per litre VAT. So, the central and state government-imposed taxes contribute around 60% of the retail price of petrol and diesel.

There has been high demand from various stakeholders to bring the petrol and diesel prices under the ambit of GST, which would generalise the price of these motor fuels. If petrol and diesel are brought under GST, the fuel prices will be reduced in states where the VAT amount is high, while the price will be hiked, where the VAT amount is low.

Meanwhile, the demand for motor fuels is witnessing a slump due to the crisis induced by the second wave of the Coronavirus pandemic. Fuel sales of the country dropped in April 2021. As the pandemic is sweeping India, fuel sales have plummeted last month in light of the local restrictions clamped to curb the spread of infection.

By the end of April 2021, the overall fuel demand in India was down by around 7% as compared to April 2019.

Meanwhile, oil prices in the international market dropped on Monday as the catastrophic second wave of the Covid epidemic in India is cutting short the recovery in oil demand, offsetting optimism about a strong rebound in demand in developed countries and China in the second half of 2021.

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