Explained: How India tamed fuel prices amid soaring global oil rates, stood 2nd in price parity

About 80% of India’s oil requirement is met through imports, meaning that a change in crude prices results in a hike in petrol and diesel rates in the country.

New Delhi: Crude oil prices oil in the global markets increased from $63.4 per barrel in April 2021 to $112.87 per barrel in March 2022 – an increase of 78% in just one year. However, in comparison, crude oil prices have increased by 33% since January 2022, maintaining affordability for crores of users, despite being a major importer. 

According to official data, about 80% of India’s oil requirement is met through imports, meaning that a slight change in global crude prices results in a hike in petrol and diesel rates in the country. 

However, even amid an alarming rise in global crude oil prices in the backdrop of the ongoing Russia-Ukrian war, fuel prices in India have remained one of the lowest among countries that do not produce oil themselves. 

For instance, oil prices in India are one of the second most affordable in India among countries dependent on petrol imports. Fuel prices remain the lowest in Turkey on this list which also includes economies like Japan. 

Comparison with neighbouring countries

Petrol and diesel prices are lower in Pakistan and Sri Lanka than in India. The prices of petrol have been made affordable as part of the appeasement policies of the respective government. 

Comparison with BRICS Nations 

Among the BRICS countries, petrol and diesel prices in India are the lowest after Russia. However, it must be noted that Russia is an oil-producing country, and therefore the oil rates are more affordable there.

Here’s how Central Government to reduce international oil prices: 

- One of the major steps taken by the Central government is the reduction in tax on oil which has made petrol and diesel more affordable. The decision that came on November 3, 2021, made petrol and diesel affordable by Rs 5 and Rs 10, respectively. 

- The Central government is losing about Rs 8,700 crore per month and Rs 1 lakh crore annually by reducing the taxes. 

- Following the Central government’s move, all the BJP states and several other states ruled by non-BJP parties also reduced VAT on petrol and diesel. 

- States which cut VAT on fuel lost a total of Rs 15,969 crore in revenue, of which, Rs 11,398 crore was released by the BJP ruled states themselves. Also Read: LIC IPO opens on May 4, stock exchanges listing on May 17

- However, several states did not cut taxes on petrol and diesel. These states include Maharashtra, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala and Jharkhand. Also Read: Sensex tumbles over 537 points on profit booking in IT, financial shares