Fuel price cut after one-month hiatus – diesel by 41 paise, petrol unchanged

Those tanking up on diesel have marginal reason to rejoice. Over the past two days, the price of diesel has come down by 41 paise a litre. In Mumbai, the diesel car or truck user will today pay Rs 97.04 for a litre of diesel, down from the Rs 97.45, which had held steady for a month from July 17 to August 17.

With this, over two days, diesel has become cheaper by 41 paise in Mumbai, 40 paise in Delhi, 37 paise in Chennai and 45 paise in Kolkata.  This 41 paise relief on a litre of diesel means the Mumbai-based owner of a Hyundai Creta Diesel, which has a 50-litre fuel tank, will save Rs 20.50 paise on a full tank. And for commercial vehicle users, for whom the  the unabated price increase for diesel has been hitting their profitability hard, the savings will be a slightly more, given the larger tank size. For instance, a 37-tonner Tata truck like the LPT 3718 has a 400-litre tank – net savings of Rs 164 on a full tank here.

Petrol prices stay unchanged
With no price cut on pricier petrol, the fuel maintains its record high prices across all four metros and across the country. In Mumbai today, petrol costs Rs 107.83 a litre, while it is Rs 101.84 in Delhi, Rs 99.47 in Chennai and Rs 102.08 in Kolkata.

Highly taxed fuels
One of the reasons for the wallet-busting fuel prices is the high level of Central and State taxes. For instance, in Delhi, on August 17, 2021, petrol cost Rs 101.84 a litre of which 32.30% (Rs 32.90) comprises excise duty and 23% (Rs 23.50) is State VAT. Club the two taxes and motorists are paying Rs 56.40 or 55.38% of each petrol litre as tax.

As regards diesel which cost Rs 89.87 a litre in the capital city between July 16-August 17, the excise duty component was Rs 31.80 or 35.38%, while VAT is Rs 13.14 or 14.62% of the retail price. Together, the two taxes account for Rs 44.94 or exactly 50% of the price a motorist pays to tank up on diesel.

In FY2021, the Centre got Rs 334,894 crore excise duty from petrol and diesel. As Autocar Professional's Murali Gopalan wrote last month in his fuel pricing analysis, from the Centre’s point of view, it is only too well known that petrol and diesel account for a significant part of its revenue streams more so at a time when GST collections are little to write home about.

States are also financially fragile which also puts in perspective the imperatives of levying value-added tax on auto fuels. While everyone is busy mopping up revenue during a difficult Covid period, it is the customer who is suffering silently.