Why petrol and diesel prices are on rise in India?

         Petrol-diesel price rises 

• Today we are talking about petrol and diesel price hike in India on month of June,2020.We will discuss the reason behind this on today.

                               
                

• Everyone is worried that Petrol and diesel prices has gone up so much on recently. As all of know that due outbreak of COVID-19 economy condition detoriate. At this circumstances if fuel price gone rise,then we,specially middle class people's life will become unpleasant.
• Earlier there was a difference between petrol and diesel prices atleast 10-15 rupee.Now there is no more difference seen in recent time.If you are compare price between petrol and diesel in Delhi,you will see prices are almost identical or same.

     

    Media/Channel/Newspaper :

• That is why the some newspaper has been published the article based on the topic. Some sample copy mentioned in below-

• As you see 16th,17th and 20th in a row increased prices that took the cumulative increase to a steep Rs. 8 to Rs. 10 respectively. 

• One chart shared by CNBC TV 18,that clearly shows how petrol diesel prices will rises from 7th June,2020.
• At the starting on 7th June,20 the petrol price was Rs.71.86 and diesel was Rs. Rs. 69.99.Then gradually increase the price of petrol-diesel,now it's becomes almost Rs. 80 and the difference between petrol-diesel also continues to decrease.As discussed earlier prices of petrol-diesel in Delhi almost equal ie. around Rs. 80. 

• Today's Petrol price in Kolkata (West Bengal) is Rs. 82.05 per litre and diesel is Rs. 75.52 per litre.Petrol prices rises up daily and while diesel has touched a record high on dated 28th June,2020.

Petrol-Diesel comparison on dated 28th June,2020

• The price of diesel was not so high till now across the metro city of India.

       Record Increase in Fuel in any fortnight:

• This increase in rate since June 7 is the highest for any fortnight since fuel pricing was deregulated in April,2002. According to the available pricing data,the maximum that rate rate have increased in any fortnight was Rs. 4-5 per litre. Deregulation means government does not have control of fuel prices but they are decided depending upon the price of crude oil in international market and refining costs.

• As you compare with recent fuel fortnight price with older one,then you will see that the price has increased a lot now ie. from Rs. 4-5 to Rs.8-10 per litre.

       Key factor in Price rise :

• The reason is that the price is increasing so much depend on the some key factors as mention below-

1. Now,due to outbreak of COVID-19 pandemic and subsequent lockdown in  across the India as well as various parts of world,the demand of crude oil fall sharply earlier this year,which led to a fall in global oil prices. Follow the same prices of crude oil price decrease in march,20 almost $20 per barrel due to COVID-19.But now situation has improved considerably in the global market.Everybody comes out from lockdown,subsequently crude oil price gradually increasing due to demand rises. As you know India government, 84% of crude oil import from outside and remaining 16% we make here.Hence large amount of crude oil import. So our government depends upon crude oil barrel price in international market and according price o fuel will be up & down.

       
        

• Now brent crude oil per barrel price increases recently,it is over more than $40 and accordingly our petrol-diesel price also increase.

            

   2. Second reason is rupee-dollar exchange. As you know value of INR is decreasing due to lockdown & COVID-19. So we bought with more money in terms of rupee.Below picture shows that before lockdown in March,20 value of INR is 71 in terms of dollar.But due to restriction in lockdown in end of March,20 INR value has decreased.Now it becomes almost rupee 76 in terms of 1 dollar.    

   

3. Third reason is the most important key factor which is excise duty and VAT.As you know excise duty imposed by central government and VAT or sales tax imposed by state government on fuel price. Taxes are make-up for nearly two-third of retail selling price by central and state government.

      

• Please also note that as per finance commission 42% of excise duty have to pay State government also.
• The government on March 14 hiked excise duty on petrol and diesel by Rs. 3 per litre each.
• Then again on May 5 by a record Rs.10 per litre in case of petrol and Rs. 13 on diesel. 

      Should Government Benefits to consumer :

• Someone says that benefits to consumer in right way.
• On other side economist says that it will generate revenue to our government. Since March,20 India government don't have any revenue due to lock down.Government is also investing in health due to corona-19.Recent hike in taxes,the government expected to gain additional Rs. 1.6 lakh crore additional revenue as per economist.
• However if the excise duty and sales tax reduce by both Central and State government the fuel price surely go down.

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