Tale of two fuels: The irony of rapid rise and trickling fall in prices of petrol and diesel

Petrol and diesel prices have seen negligible cut in last one week.

New Delhi: The drop in petrol and diesel prices does not seem to be bringing much needed respite to people who were made to pay a hefty price per litre when fuel prices went on an upward spiral after a 19-day pause. On the contrary, when the prices are coming down, the reduction is very marginal vis-a-vis the previous hikes in prices.

Fuel prices were reduced for the seventh consecutive day on Tuesday. Petrol price has dropped by 59 paisa a litre and diesel by 42 paisa in the last one week. This compares to Rs 3.64 a litre hike in petrol and Rs 3.24 a litre hike in diesel rates in Delhi in the fortnight after state-owned oil firms ended a 19-day pre-Karnataka poll hiatus to resume daily price revision on May 14.

Petrol in Delhi today costs Rs 77.83 and diesel by Rs 68.88, a reduction of 13 and 9 paise respectively from Monday's prices. The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up. Prices in Delhi are the lowest among all metros and most state capitals due to lower sales tax or VAT.

However, the government is in no mood to review the daily price mechanism. State-owned oil companies in June 2017, dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantly reflect changes in cost.

Under the dynamic pricing scheme, petrol and diesel prices are revised on a daily basis in sync with global crude oil prices.

Ruling out a daily price review of petrol and diesel, Oil Minister Dharmendra Pradhan on Monday asked state governments to tax petrol and diesel within a reasonable and responsible band and not continue to reap bonanza from rising oil prices.

With Agency Inputs