Petroleum products are used as raw materials in various sectors and industries such as transport and petrochemicals. These products may also be used in factories to operate machinery or generators. Any fluctuation in the price of petrol and diesel impacts the production and transport costs of various items. When compared to other neighbouring countries, India has the highest prices for petrol and diesel.
How is the price of petrol and diesel fixed?
Historically, the price of petrol and diesel in India was regulated, i.e. the government was involved in the deciding the retail price. The government deregulated the pricing of petrol in 2010 and diesel in 2014. This allowed oil marketing companies to determine the price of these products, and revise them every fortnight.
Starting June 16, 2017, prices for petrol and diesel are revised on a daily basis. This was done to with the idea that daily revision will reduce the volatility in retail prices, and protect the consumer against sharp fluctuations. The break-up of retail prices of petrol and diesel in Delhi on April 25, 2018 can be found below. As seen in the table, over 50% of the retail price of petrol comprises central and states taxes and the dealer's commission. In case of diesel, this amount is close to 40%.
Does India produce enough petroleum to support domestic consumption?
India imports 84% of the petroleum products consumed in the country. This implies that any change in the global prices of crude oil has a significant impact on the domestic price of petroleum products. In 2000-01, net import of petroleum products constituted 75% of the total consumption in the country. This increased to 95% in 2016-17. The figure below shows the amount of petroleum products consumed in the country, and the share of imports.
What has been the global trend in crude oil prices? How has this impacted prices in India?
Over the last five years, the global price of crude oil (Indian basket) has come down from USD 110 in January 2013 to USD 64 in March 2018, having touched a low of USD 28 in January 2016.
While there has been a 42% drop in the price of global crude over this five-year period, the retail price of petrol in India has increased by 8%. During this period, the retail price of diesel increased by 33%. The two figures below show the trend in prices of global crude oil and retail price of petrol and diesel in India, over the last five years.
How has the excise duty on petrol and diesel changed over the last few years?
Under the Constitution, the central government has the powers to tax the production of petroleum products, while states have the power to tax their sale. Petroleum has been kept outside the purview of the Goods and Services Tax (GST), till the GST Council decides.
Over the years, the central government has used taxes to prevent sharp fluctuations in the retail price of diesel and petrol. In the past, when global crude oil prices have increased, duties have been cut. Since 2014, as global crude oil prices declined, excise duties have been increased.
As a consequence of the increase in duties, the central government's revenue from excise on petrol and diesel increased annually at a rate of 46% between 2013-14 and 2016-17. During the same period, the total sales tax collections of states (from petrol and diesel) increased annually by 9%. The figure below shows the trend in overall collections of the central and state governments from petroleum (including receipts from taxes, royalties, and dividends).
Courtesy: PRS Legislative Research (prsindia.org)
|State Capitals (Applicable from 6:00 a.m. on 26-04-2018)||Petrol Current Price(Per Lt)||Petrol Previous Price(Per Lt)||Change(Rs)|
|Petrol price in Delhi||Rs.74.63||Rs.74.63||0.00|
|Petrol price in Kolkata||Rs.77.32||Rs.77.32||0.00|
|Petrol price in Mumbai||Rs.82.48||Rs.82.48||0.00|
|Petrol price in Chennai||Rs.77.43||Rs.77.43||0.00|
|Petrol price in Faridabad||Rs.75.39||Rs.75.39||0.00|
|Petrol price in Gurgaon||Rs.75.15||Rs.75.15||0.00|
|Petrol price in Noida||Rs.75.87||Rs.75.87||0.00|
|Petrol price in Ghaziabad||Rs.75.76||Rs.75.76||0.00|
|Petrol price in Agartala||Rs.70.41||Rs.70.41||0.00|
|Petrol price in Aizwal||Rs.70.54||Rs.70.54||0.00|
|Petrol price in Ambala||Rs.74.75||Rs.74.75||0.00|
|Petrol price in Bangalore||Rs.75.82||Rs.75.82||0.00|
|Petrol price in Bhopal||Rs.80.18||Rs.80.18||0.00|
|Petrol price in Bhubhaneswar||Rs.73.46||Rs.73.46||0.00|
|Petrol price in Chandigarh||Rs.71.77||Rs.71.77||0.00|
|Petrol price in Dehradun||Rs.76.33||Rs.76.33||0.00|
|Petrol price in Gandhinagar||Rs.73.94||Rs.73.94||0.00|
|Petrol price in Gangtok||Rs.77.60||Rs.77.60||0.00|
|Petrol price in Guwahati||Rs.76.73||Rs.76.73||0.00|
|Petrol price in Hyderabad||Rs.79.04||Rs.79.04||0.00|
|Petrol price in Imphal||Rs.72.74||Rs.72.74||0.00|
|Petrol price in Itanagar||Rs.70.61||Rs.70.61||0.00|
|Petrol price in Jaipur||Rs.77.32||Rs.77.32||0.00|
|Petrol price in Jammu||Rs.76.40||Rs.76.40||0.00|
|Petrol price in Jullunder||Rs.79.83||Rs.79.83||0.00|
|Petrol price in Kohima||Rs.73.10||Rs.73.10||0.00|
|Petrol price in Lucknow||Rs.75.83||Rs.75.83||0.00|
|Petrol price in Panjim||Rs.68.75||Rs.68.75||0.00|
|Petrol price in Patna||Rs.80.13||Rs.80.13||0.00|
|Petrol price in Pondicherry||Rs.73.42||Rs.73.42||0.00|
|Petrol price in Port Blair||Rs.64.39||Rs.64.39||0.00|
|Petrol price in Raipur||Rs.75.06||Rs.75.06||0.00|
|Petrol price in Ranchi||Rs.74.99||Rs.74.99||0.00|
|Petrol price in Shillong||Rs.74.04||Rs.74.04||0.00|
|Petrol price in Shimla||Rs.74.77||Rs.74.77||0.00|
|Petrol price in Srinagar||Rs.79.00||Rs.79.00||0.00|
|Petrol price in Trivandrum||Rs.78.61||Rs.78.61||0.00|
|Petrol price in Silvasa||Rs.72.57||Rs.72.57||0.00|
|Petrol price in Daman||Rs.72.50||Rs.72.50||0.00|
Source for rates: Indian Oil Corporation