Price of diesel has crossed Rs 80 mark for the first time in Delhi. On Thursday, the price of diesel in the city was reported to be Rs 80.02 a litre, up 14 paise, while that of petrol increased by 16 paise to Rs 79.92 a litre.
The price of diesel continued to be higher in the city for a second straight day on Thursday. This was for as 19th day in a row that fuel prices saw no downward trend in India. In Mumbai, the price of petrol touched Rs 86.7 a litre and diesel went up to Rs 78.34 a litre. In Kolkata, the prices were at Rs 81.61 a litre and Rs 75.18 a litre, respectively. During the time of lockdown, oil marketing companies did not revise the prices for 83 days in a row and started revising it upward only from June 8 onwards.
A major reason for diesel being dearer than Petrol in Delhi was an increase in value-added tax (VAT) levied on diesel by the state government in May 2020. The state had increased the VAT on diesel from 16.75 per cent to 30 per cent and on diesel from 27 per cent to 30 per cent. This hike in VAT resulted in rates going up by Rs 1.67 per litre for petrol and a record Rs 7.10 for diesel on a single day. On Wednesday, Sanjiv Singh, chairman of Indian Oil Corporation, also blamed higher VAT for the rising diesel prices in Delhi.
Interestingly, the Centre too was not far behind in increasing the excise duty on petrol and diesel. On March 14, excise duty on both petrol and diesel were increased by Rs 3 a litre each. Later, on May 5, the Centre again raised the duty by Rs 10 a litre on petrol and Rs 13 a litre on diesel, the steepest duty hike in the history of the fuel. Singh had clarified that around 70 per cent of the fuel prices comes in the form of taxes and the company only deals with 30 per cent base price, that is benchmarked to the international product prices. Based on the last available data of June 16, the base price on petrol was a mere Rs 22.11 a litre, while that of diesel was Rs 22.93 a litre.
Traditionally, taxes on diesel were kept low by governments due to its impact on the economic and agricultural activities due to higher consumption. Based on data available with Business Standard, consumption od diesel increased 125 per cent from a mere 36.6 million tonne (MT) in 2002-03 to 82.6 MT in 2019-20. The prices, on the other hand, increased over three-fold to Rs 80.02 a litre on Thursday (June 26, 2020) from a mere Rs 19.08 a litre on June 26, 2003. In May 2014, before the Narendra Modi government took charge, diesel prices were seen at Rs 56.71 a litre.