Diesel price hits record high after rates hiked for 15th day in a row; petrol up 35 paise

Petrol price in Delhi was hiked to Rs 79.23 per litre from Rs 78.88, while diesel rates were increased to Rs 78.27 a litre from Rs 77.67, according to a price notification of state oil marketing companies.

Diesel price on Sunday hit a fresh record high after rates were hiked by 60 paise per liter while petrol price was up 35 paise, taking the cumulative increase in rates in 15 days to Rs 8.88 a liter and Rs 7.97 respectively.

Petrol price in Delhi was hiked to Rs 79.23 per liter from Rs 78.88, while diesel rates were increased to Rs 78.27 a liter from Rs 77.67, according to a price notification of state oil marketing companies.

Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or VAT. Taxes make up for nearly two-thirds of the retail selling price. As much as Rs 50.69 per liter, or 64 percent, in the petrol price, is due to taxes -- Rs 32.98 is the central excise duty and Rs 17.71 is local sales tax or VAT.

Over 63 percent of the retail selling price of diesel is taxes. Out of the total tax incidence of Rs 49.43 per liter, Rs 31.83 is by way of central excise and Rs 17.60 is VAT. Petrol in Mumbai costs Rs 86.04 per liter and diesel is priced at Rs 76.69. The 15th daily increase in rates since oil companies on June 7 restarted revising prices in line with costs after ending an 82-day hiatus in rate revision, has taken diesel prices to fresh highs. The petrol price is at a two-year high.

Prior to the current rally, the peak diesel rates had touched was on October 16, 2018, when prices had climbed to Rs 75.69 per liter in Delhi. The highest-ever petrol price was on October 4, 2018, when rates soared to Rs 84 a liter in Delhi. When rates had peaked in October 2018, the government had cut excise duty on petrol and diesel by Rs 1.50 per liter each. State-owned oil companies were asked to absorb another Re 1 a liter to help cut retail rates by Rs 2.50 a liter.

Oil companies had quickly recouped the Re 1 and the government in July 2019 raised excise duty by Rs 2 a liter. The 82-day freeze in rates this year was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.

The government on March 14 hiked excise duty on petrol and diesel by Rs 3 per liter each and then again on May 5 by a record Rs 10 per liter in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenues. Oil PSUs Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), instead of passing on the excise duty hikes to customers, adjusted them against the fall in the retail rates that was warranted because of a decline in international oil prices to two-decade lows

International oil prices have since rebounded and oil firms are now adjusting retail rates in line with them. In 15 hikes, the petrol price has gone up by Rs 7.97 per liter and diesel by Rs 8.88 a liter.