Petrol and diesel prices were on Wednesday hiked for the eleventh consecutive day as part of the daily revision by Oil Marketing Companies (OMCs). With effect from 6 am, the prices of petrol were increased by 55 paise per litre and diesel by 60 paise per litre in Delhi, compared to the previous day.
On Tuesday, the petrol price was hiked by 47 paise per litre, while diesel rates had gone up by 57 paise. The rates are expected to climb further as OMCs look to recover revenue lost during the lockdown.
The recent hike in fuel prices has been criticised by the opposition parties, who say the sharp rise in fuel price will increase problems in the lives of people who are already facing higher economic stress due to the coronavirus pandemic.
On Tuesday, Congress president Sonia Gandhi wrote a letter to Prime Minister Narendra Modi urging him to roll back the continuing fuel price hikes, saying, “If you want people to be self-reliant then do not place financial fetters on their ability to move forward….I am deeply distressed that in these exceedingly difficult times since the beginning of March, the government has taken the wholly insensitive decision to increase petrol and diesel prices on no less than ten separate occasions.”
On Sunday, petrol price was hiked by a record 62 paise per litre and that of diesel by 64 paise.
The freeze in rates was imposed in mid-March soon after the government hiked excise duty on petrol and diesel to shore up additional finances.
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 international oil prices falling to two-decade lows.
The government had first raised excise duty on petrol and diesel by Rs 3 per litre each on March 14 and then again on May 5 by a record Rs 10 per litre in case of petrol and Rs 13 on diesel. The two hikes gave the government Rs 2 lakh crore in additional tax revenues.
State-owned fuel retailers IOC, BPCL and HPCL had frozen petrol and diesel prices since March 16, as if anticipating the government move and set off gains they accrued from continuing drop in international oil prices against the excise duty hike.
They, however, promptly passed the increase in local sales tax or VAT by state governments such as Rs 1.67 increase in VAT on petrol and Rs 7.10 in diesel by the Delhi government on May 4.
The total incidence of excise duty on petrol has risen to Rs 32.98 per litre and that on diesel to Rs 31.83. The excise tax on petrol was Rs 9.48 per litre when the Narendra Modi government took office in 2014 and that on diesel was Rs 3.56 a litre.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government's excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
It cut excise duty by Rs 2 in October 2017 and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019.
It again raised excise duty on March 14 by Rs 3 per litre.