Fuel prices were hiked by Rs 1 in 3 Indian states- Maharashtra, West Bengal and Karnataka. State governments increased their VAT/tax rates to increase their financial coffers but the other states haven’t decided on the same. With no increase in fuel prices by the oil retailers while the international crude rates keep on sliding, states saw an opportunity in hiking petrol and diesel prices. We can expect the other states to increase the prices shortly but as of now, there is no imminent hike by other states.
Oil retailers haven’t increased their prices in expectations of excise duty hike by the Indian Government. Petrol and diesel prices are unchanged since the oil dropped its lowest in recent years to $30/ barrel. Impact of price hike won’t be felt immediately on the consumers with most of them restricted to their home due to lockdown. The move is expected to add money to the government collection once the lockdown eases and vehicular movement resumes.
Indian Oil chairman Sanjiv Singh was quoted by media outlets “ Crude and products have separate dynamics. Crude is falling due to oversupply. But products are purely guided b demand which is plunging due to coronavirus impact. Fuel prices are at a comfortable level. It will not be right to move (pump prices) them according to unrealistic global prices because of the government raises excise — rightly so at this time — then fuel prices will have to be raised also”.
The BJP led governemt had taken authorization from the Parliament to increase excise duty on petrol and diesel by Rs 8 per litre in the future. Indian governemt had raised the excise duty on petrol and diesel on 9 separate occasions whenever the global oil prices decreased.
The hike in the corresponding time had led to an increase in Government Excise duty collection from Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
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