No relief from Centre, 4 states cut fuel prices

Siddhant Pandey
·2-min read

No relief from Centre, 4 states cut fuel prices
No relief from Centre, 4 states cut fuel prices

22 Feb 2021: No relief from Centre, 4 states cut fuel prices

Even as the central government faces criticism over high fuel prices, four states have decided to offer some relief to consumers.

On Sunday, the poll-bound West Bengal became the fourth state after Rajasthan, Assam, and Meghalaya to reduce taxes on petrol and diesel.

Notably, the Centre has refused to slash excise duty on crude oil, which had been raised as its price plummeted.

Details: Bengal reduces VAT by Re. 1

West Bengal on Sunday reduced VAT on petrol and diesel by Re. 1 effective from February 22.

Rajasthan had on January 29 reduced VAT from 38% to 36%.

In poll-bound Assam, an additional tax of Rs. 5 imposed last year to fund the fight against the COVID-19 pandemic was withdrawn.

Meanwhile, Meghalaya offered relief of Rs. 7.40 on petrol and Rs. 7.10 on diesel.

Centre: Excise duty on petrol, diesel was raised last year

Last year, as India's crude purchase cost fell to $19.9/barrel due to the coronavirus pandemic, the Centre had cumulatively raised the excise duty by Rs. 13 per liter on petrol and Rs. 16 per liter on diesel between March and May 2020.

The government has blamed India's dependence on oil imports and producers controlling output for the high fuel prices.

Fact: How do fuel prices today compare to last year?

In Delhi, petrol and diesel were priced at Rs. 89.21/liter and Rs. 79.70/liter respectively on Sunday. India purchased crude at $63/barrel. The same day last year, petrol and diesel were priced at Rs. 71.89/liter and Rs. 64.65/liter respectively when crude averaged $54.63/barrel for February 2020.

Rise: Excise on petrol raised by 64%; 74% on diesel

Effectively, pump prices have risen by 24% even as the price charged to dealers has only changed slightly and crude became just 15% costlier.

Excise on petrol has risen 64% from Rs. 19.98 to Rs. 32.90 and 74% from Rs. 18.83 to Rs. 32.90 on diesel.

While the excise duty remains the same, the difference in VAT across states causes pump prices to vary.

Statement: Government blames output cuts by OPEC, COVID-19

Union Petroleum Minister Dharmendra Pradhan had on Sunday blamed recent output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and the pandemic for the fuel price hike in India.

Pradhan said oil manufacturing countries are producing less fuel for profit, making consumer countries suffer.

On Saturday, Union Finance Minister Nirmala Sitharaman had said the situation presented "dharam sankat (dilemma)" for the government.