Petrol prices rose by upto another 30 paisa today -- the 10th hike in 10 days.
As the relentless upward march of fuel prices continued for the 10th straight day today, sources said the government has taken a decision to cut oil prices. But there is no clarity yet on how it would be achieved. Sources indicated that the finance ministry and the petroleum ministry differ on whether oil companies should reduce prices and take a hit, or excise be lowered, which will slash revenue. Junior finance minister Shiv Pratap Shukla said Prime Minister Narendra Modi is taking the matter seriously. Today, petrol prices almost touched Rs. 85 in Mumbai, in Chennai it crossed Rs 80 and in Delhi, Rs 77.
Here are the top 10 updates in this big story:
The opposition parties kept up the pressure on the Centre to cut prices. Former union minister P Chidambaram claimed in a series of tweets that it was possible to cut up to Rs. 25 per litre in petrol prices, but the government will not do so.
"Central government saves Rs. 15 on every litre of petrol due to fall in crude oil prices. Central government puts additional tax of Rs. 10 on every litre of petrol," his tweet read.
The BJP has asked states to cut taxes on fuel. Four BJP-ruled states -- Madhya Pradesh, Rajasthan and Chhattisgarh, where election will be held later this year -- and Maharashtra, are among those levying high taxes on fuel.
The opposition accuses the government of failing to provide relief to the common man by cutting excise duty. Demand to cut excise has also been reiterated by various industry bodies, including FICCI. There are also suggestions that instead of excise, the flagship Goods and Services tax be levied on fuel.
Levying GST on any product comes under the finance ministry, but the Centre and the states had agreed to keep petrol out of it since the beginning. Junior finance minister Shiv Pratap Shukla said petrol "can't be brought before the GST Council until and unless all states' finance ministers agree".
Petrol and diesel rates have touched record highs after the daily revision of retail prices were put on hold for 19 days. This happened ahead of the Karnataka elections and was a huge departure from the norm of day-to-day revision of prices.
Amid opposition allegations that the government was playing politics for votes, state-owned Indian Oil Corporation chief Sanjeev Singh said there was no directive from the government to cap oil prices. It was an internal decision of the firm to "moderate" the prices "because we were expecting them to fall", he said.
Yesterday, BJP chief Amit Shah said the government was working on a "formula" to check the spike in fuel prices. "The petroleum minister will have a meeting with the officials of the oil companies," Mr Shah had told reporters.
Oil prices are tied to the cost of crude oil in international market. Retail prices are set after the Centre and the states add substantial excise duty. A reduction can happen only if either excise duty is reduced -- in which case the Centre and state governments bear the loss. Else the loss can be passed on -- or oil firms directly bear the loss.
Fuel, however, is a huge source of revenue, which is why no government has been eager to cut excise duty. Government data shows the Finance Ministry raised excise duty on petrol and diesel nine times between November 2014 and February 2016. Excise duty was reduced only once in October 2017.
