After a hike of Rs 25 per litre in diesel prices for bulk buyers, the government raised petrol and diesel prices by 80 paise a litre each, while domestic cooking gas (LPG) prices were increased by Rs 50 per cylinder, after a freeze of 137 days. Retail prices of petrol and diesel had been unchanged since October 2021 when crude oil prices were hovering around $80 a barrel.
A litre of petrol in Delhi will now cost Rs 96.21 and diesel will be sold at Rs 87.47 per litre. A 14.2-kg non-subsidised LPG cylinder will now cost Rs 949.50 in the national capital. The cooking gas costs were last revised in October. The prices at the pump rose for the first time since November 4 when the central government cut excise duty and several states followed suit with a reduction in value-added tax to ease the burden on consumers.
Uddhav Thackeray-led Maharashtra government announced the reduction in VAT on fuels – Rs 2.08 per litre on petrol and Rs 1.44 per litre on diesel, former CM Devendra Fadnavis slammed the incumbent Maha Vikas Aghadi (MVA) government over the minimal reduction in fuel prices as compared to the reduction made by other states and called it a mockery of the people of the state. With this gesture, Uddhav scored brownie points. Uddhav Thackeray seemed disappointed with the quantum of excise duty reduction. He demanded that the prices of petrol and diesel should be reversed back to the levels they were priced 6-7 years ago.
Two months ago, the excise duty on petrol was hiked by Rs 18.42 per litre and today, it has been reduced by Rs 8, while the duty on diesel was increased by Rs 18.24 per litre and now it has been brought down to Rs 6. It is not good to make drastic hikes and then provide minimal reduction, Uddhav said. This has hurt the BJP because the constant fuel price hike is bothering commoners.
To opposition leader reacted by stating the state government has made a mockery of the people of Maharashtra. We have seen other states reducing the fuel prices by Rs 7 and by Rs 15. Maharashtra is the wealthiest state in the country. Its share in the country’s GDP is about 15 per cent. The central government has taken a loss of Rs 2,20,000 crore and we are taking only Rs 2,500 crore. This is nothing but a literal mockery of the citizens of Maharashtra by the MVA Government.
After Kerala, Rajasthan and Odisha agreed to the centre’s request and lowered Value Added Tax (VAT) on petrol and diesel, Maharashtra followed suit and reduced the VAT on the fuels – 2.08 per litre on petrol and Rs 1.44 per litre on diesel. The slashing of VAT will result in a loss of Rs 2,500 crore annually to the state’s exchequer. The Shiv Sena-led Maharashtra government’s move came immediately after Chief Minister Uddhav Thackeray criticised the centre’s decision to reduce excise duty, stating that there was a steep rise in the central taxes on the fuels taken in the past and now they have just reduced the same. He also demanded that the prices of petrol and diesel be brought back to what they were 6-7 years back.
Oil prices have been on the boil ever since Russia put its forces on the Ukraine border in February. They spiked after it invaded the central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted by the conflict in Ukraine or retaliatory western sanctions. Russia makes up a third of Europe’s natural gas and about 10 per cent of global oil production. About one-third of Russian gas supplies to Europe usually travel through pipelines crossing Ukraine. But for India, Russian supplies account for a tiny percentage. While India imported 43,400 barrels per day of oil from Russia in 2021 (about 1 per cent of overall its imports), coal imports from Russia at 1.8 million tonnes in 2021 made up for 1.3 per cent of all coal imports. India also buys 2.5 million tonnes of LNG a year from Gazprom of Russia. While supplies seem to be of little worry for India, it is the prices that are a cause of concern Domestic fuel prices are directly linked to international oil prices as India imports 85 per cent of its oil needs – but they had not been revised up until now.