Petrol, diesel price hiked by steepest level in a year; rates at record high

Petrol and diesel price were Friday hiked by about 50 paise per liter each - the steepest increase in rates since daily price revision came into effect over 14 months back - to push rates to their highest ever.

Petrol price was hiked by 48 paise per liter and diesel by 47 a liter, according to price notification issued by state fuel retailers.

A liter of petrol in Delhi now costs Rs 79.99 - a record high. It costs Rs 87.39 in Mumbai.

Diesel is now priced at Rs 72.07 a liter in Delhi and Rs 76.51 per liter in Mumbai.

Opposition parties have announced nationwide strikes and protests next week over record-high fuel prices which they blame on high taxes.

On Wednesday, Finance Minister Arun Jaitley was remained non-committal on cutting excise duty to cushion spiraling petrol and diesel prices, saying international oil prices are volatile and have not shown any linear movement.

Since mid-August, petrol price has risen by Rs 2.85 a liter and diesel by Rs 3.3 per liter as the rupee hit a record low against the US dollar, making imports costlier.

Opposition Congress has demanded that the Centre cut excise duty as was done by previous governments, which cut rates whenever international oil prices shot up.

Almost half of the retail selling price of the two fuel is made up of central and state taxes.

Prices have been on fire since mid-August, rising almost every day due to a combination of a drop in rupee value and rise in crude oil rates.

On Tuesday, former Finance Minister P Chidambaram had stated that the "Relentless rise in prices of petrol and diesel is not inevitable. Because the price is built up by excessive taxes on petrol and diesel. If taxes are cut, prices will decline significantly".

The Centre currently levies a total of Rs 19.48 per liter of excise duty on petrol and Rs 15.33 per liter on diesel. On top of this, states levy Value Added Tax (VAT) - the lowest being in Andaman and Nicobar Islands where a 6 percent sales tax is charged on both the fuel.

Mumbai has the highest VAT of 39.12 percent on petrol, while Telangana levies the highest VAT of 26 percent on diesel. Delhi charges a VAT of 27 percent on petrol and 17.24 percent on diesel.

The central government had raised excise duty on petrol by Rs 11.77 a liter and that on diesel by 13.47 a liter in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a liter.

This led to its excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. States saw their VAT revenue from petro goods rise from Rs 1,37,157 crore in 2014-15 to Rs 1,84,091 crore in 2017-18.

Prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT.