Fuel prices today hit a new lifetime high after they witnessed yet another hike across the country. After a hiatus of one day, the price of petrol in Delhi was raised by 20 paise to Rs 79.51. In Mumbai and Kolkata, the price of petrol was increased by 19 paise each to Rs 86.91 and Rs 82.41 respectively. In Chennai, the price of petrol has been hiked by 21 paise to Rs 82.62. Diesel too has reached its all-time high.
A litre of diesel is being sold at Rs 71.55 in Delhi, Rs 75.96 in Mumbai, Rs 74.40 in Kolkata and Rs 75.61 in Chennai.
The recent hike in fuel prices has been attributed to a sharp rise in international crude prices and a dramatic fall in the exchange value of the rupee against the US dollar. While the prices of fuel are on a continuous rise, the government has blamed the 'external factors' behind the spike and called the movement 'temporary'.
Finance Minister Arun Jaitley on Wednesday said: "There is no straight line movement of global crude oil prices. They go up, they come down. In April and May, there was a lot of pressure. In June, they came down. In July, they came down and in August, there is again (an upward) movement. In the last two days, there has been some moderation. For six days before that, there was again."
However, these arguments have so far failed to cut ice with a section of people and opposition parties who have been demanding excise duty cut on petrol and diesel. Political parties such as Congress, TMC, BJD, SP and Shiv Sena have lashed out at the government over hike in fuel prices and asked for a cut in taxes to provide relief to the common people.
Former Finance Minister P Chidambaram said: "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."
However, the government has so far not given any indication to cut excise duty on petrol and diesel as it has limited fiscal space available to take any dent in revenue collections. According to reports, the government believes that the current account deficit will overshoot the target if it goes for excise duty cut on petrol and diesel.
Almost half of the fuel price is made up of taxes. The Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy Value Added Tax (VAT) - the lowest being in Andaman and Nicobar Islands where a 6 per cent sales tax is charged on both the fuel.
Mumbai has the highest VAT of 39.12 per cent on petrol, while Telangana levies the highest VAT of 26 per cent on diesel. Delhi charges a VAT of 27 per cent on petrol and 17.24 per cent on diesel.
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