It appears as though the eventual capitulation of the Government in New Delhi to intervene in providing relief for the runaway price rises of diesel and petrol has done very little. Following an October 5 announcement by the Finance Ministry that it would effect a Rs. 2.50 reduction in the excise duty of both these fuels in a 60:40 split with oil marketing companies (OMCs), many states like Rajasthan, doubled this relief by cutting the same amount from their own state-levied value added taxes, providing an effective decrease of Rs. 5 on every litre of diesel or petrol.
However, prices seem to be back on their upward march, with petrol heading above the Rs. 80 mark in all Metros, including Mumbai. As of today, the price for a litre of petrol in Mumbai is Rs. 87.29, while in Delhi it is 81.82. Diesel too has seen a significant rise in its prices, retailing at Rs. 73.53 and Rs. 77.06 in both these cities. While they are down from what they were before the announcement from the Finance Ministry, the fact remains that the rates are the highest they have been. For example, even though the government’s duty cut brought the price of petrol down from Rs. 91.34 per litre to Rs. 86.87 per litre in Mumbai, its current rise is close to 50 paise per litre in a matter of days, suggesting the same if not slightly more accelerated pace of increase.
While India battles with the rising price of crude oil in the world, along with a weakening rupee, it must be noted that the framework of excise duty and value added taxes on diesel and petrol account for nearly half of their cost.