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Petrol, diesel prices increased by 2 per litre in this state. Here is why

People in Kerala will soon have to shell out more to buy petrol or diesel in the state. The state government has decided to increase the price on both fuel in its Budget 2023. The state will introduce a new cess on the fuel as well as India-made foreign liquor. The new cess will add another 2 per litre cost to petrol and diesel. The proposal was made today during the state government's Budget presentation, and is likely to be implemented soon.

The Kerala government has added a new cess to petrol and diesel prices in the state in its Budget for 2023-24. (REUTERS)

The Kerala state government has decided to impose Social Security Cess on sale of petrol and diesel at the rate of 2 per litre. The cess on petrol and diesel sale is expected to mop up an additional revenue of 750 crore to the Social Security Seed Fund. This is the first major hike in petrol and diesel prices in the state since last year when the prices were last revised.

Currently, petrol price in Kerala is at 105.81 per litre, and is one of the highest across the country. Diesel also costs 94.74 per litre in the state.

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After a series of hikes during the Covid years, petrol and diesel prices were not updated since April 6 last year. This strategy was taken despite the input crude oil prices surging from $102.97 per barrel that month to $116.01 per barrel in June 2022 and falling to $82 per barrel in January 2023.

The price freeze on fuel, which has remained stagnant for the longest time in recent years, have meant losses for retail oil companies. At one point, profit on petrol was 10 per litre, but subsequent firming of oil prices have trimmed it down by 50 per cent. Meanwhile, losses on diesel have widened to 13 a litre from 10-11 last month.

Besides increasing price on petrol and diesel, the Kerala government has offered some incentives for those looking to shift to electric cars. In its Budget, the state government has proposed a one-time tax on electric motor cabs and electric tourist motor cabs to be reduced to five per cent of the purchase value.

First Published Date: 03 Feb 2023, 12:26 PM IST