Petrol hits century in India, turns costlier than in Pakistan and neighboring countries
Petrol prices in India have either crossed the Rs 100 mark or are inching towards the magical figure. With the latest revision, a litre of petrol costs more than Rs 100 in cities such as Mumbai (Rs 102.58), Hyderabad (Rs 100.20), Jaipur (Rs 102.99) and others.
In Bengaluru the petrol-meter swung to Rs 99.63 per litre mark while the rate in other metros such as Chennai, New Delhi, and Kolkata inced closer to the Rs 100 mark.
With this revision, petrol retails at the highest price in South East Asian economies.
The current increase in Petroleum products has been attributed to rising crude prices. A week ago, Saudi Arabia, a key member of the Oil Producers & Exporting Countries cartel, announced special rates for customers in South Asian markets.
Producers such as Saudi have resorted to increase crude price following months of a slump. Crude price struck to all-time lows of $13 per barrel in March 2020. Crude oil related Futures or paper contracts had turned negative in April 2020. Despite a meteoric crash in crude prices, the price of petroleum products in India has managed to maintain a high.
For the month of June, the Petroleum Planning & Analysis Cell states the Crude Oil (Indian Basket) FOB price at Rs 5,212.90 per barrel. Each barrel contains 159 litres or 42 gallons of liquid. Therefore, India is likely to have imported crude at a price of Rs 32.78 per litre.
Oil Marketing Companies such as Bharat Petroleum, Indian Oil, and Hindustan Petroleum add refiner margins, Central excise duty, State Excise Duties such as Octroi, Value-added taxes, local body taxes, cess and dealer margins to arrive at a final price. Reports indicate that as much as 70 percent of the petroleum price contains tax such as VAT, Excise, State Duties, and other cess.
Petrol prices can be rationalized by subsuming them under the purview of GST. Union Petroleum Minister, Dharmendra Pradhan, has joined the calls of agencies in requesting the Finance Ministry and the GST council to think about it. But, India which implemented GST on 1st July 2017 under the vision of One Nation, One Tax, is yet to include petroleum products under GST.
The reason for delay in subsumption of petroleum under GST may be linked to taxation becoming a major revenue driver in recent times. In his answer to the Lok Sabha, Minister of State for Finance, Anurag Singh Thakur said the tax collections on petrol and diesel rose to Rs 2.94 lakh crore in the first 10 months of the current fiscal (2020-21).
In 2014-15 the central government earned Rs 72,160 crores from excise duty on petrol and diesel. In 2014-15, the tax on petroleum products accounted for 5.4 percent of the government's revenue.
In 2021-21, the tax on petroleum products accounts for 12.2 percent of the government's revenue.
The additional revenue component has not gone well with critics who find petrol selling costliest in India among South East Asian economies.
Here is the price of one liter of Petrol (calculated according to latest currency rates) in neighboring countries:
• India - Rs 96.68
• Beijing: RMB 7.36 - INR 84.28
• Thailand - THB 35.50 - INR 83.57
• Kathmandu: NPR 125 - INR 78.01
• Bangladesh: BDT 89 - INR 76.60
• Thimphu (Bhutan): Rs 68.44
• Colombo: LKR 161 - INR 59.33
• Islamabad: PKR 110.35 - INR 51.65
• Naypitaw (Myanmar): K (Myanmar Kyat) 1151.16 - INR 51.06
* Disclaimer: Data sourced from Global Petrol Prices dot com for up to 7th June 2021. These are estimates and should not be considered as accurate price of petrol owing to currency fluctuations & Ethanol blending variations.
Cartoonist: Satish Acharya
Text: Sify, Finance Desk