Petrol price crosses ₹100 for first time
Petrol and diesel rates surged on Wednesday by 25 paise per litre, the ninth hike in a row that took price of petrol past the ₹100 per litre mark in Rajasthan, its highest ever, even as Prime Minister Narendra Modi blamed the previous Congress-led United Progressive Alliance (UPA) government for the soaring prices.
While branded or additivelaced petrol, which attracts higher taxes, had crossed the ₹100 mark in some places in states like Maharashtra, Madhya Pradesh and Rajasthan, this is the first time that regular petrol crossed the figure.
In Sriganganagar town of Rajasthan, petrol price soared to ₹100.13 a litre on Wednesday, while it cost ₹89.54 in Delhi and ₹96 in Mumbai.
Retail prices of auto fuels in India vary across the country due to variations in local levies. But, their basic rates [excluding taxes, transportation and dealers commission] are aligned with the international oil market, which is constantly increasing in anticipation of robust demand amidst global rollout of Covid-19 vaccine that raised expectations of rapid recovery of global economies.
Rajasthan levies the highest value added tax (VAT) on petrol in the country. The record price in Rajasthan is despite the state government late last month cut
ting VAT on petrol and diesel by 2%. The VAT on petrol, after the cut, at 36% plus ₹1.5 per litre road cess is still the highest in the country. On diesel, the state levies 26% and ₹1.75 per litre road cess.
After Wednesday’s price increase, diesel in Delhi cost ₹79.95 and ₹86.98 in Mumbai.
At a function to inaugurate oil and gas projects in poll-bound Tamil Nadu on Wendesday, PM Modi said the middle-class would not have been burdened with the increase in fuel prices if the previous governments had focused on reducing India’s energy import dependence.
India imported over 85% of its oil needs and nearly 53% of its gas requirement in the 2019-20 financial year. “Can we be so import dependent? I don’t want to criticise anyone but I want to say (that) had we focussed on this subject earlier, our middleclass would not have been burdened,” he said.
One of the immediate reasons for rising international crude price is supply disruptions because of a winter storm in Texas, according to analysts. Benchmark Brent crude, which was below the $60 per barrel in the first week of February, soared about 7% at $63.50 a barrel on Wednesday intraday trade. Petrol and diesel have become costlier by ₹3.24 and ₹3.47 per litre since the Union Budget for financial year 2021-22 presented on February 1 that restructured central levies on them to carve out a dedicated fund of about ₹30,000 crore for the agriculture sector.
Oil producers’ cartel — the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, particularly Russia (together OPEC+) — are unwilling to raise supply that they had reduced during the peak Covid-19 pandemic period to stabilise a fall in global oil prices, one government official and two executives of state-run oil companies said requesting anonymity.SC Sharma, an energy expert and former officer on special duty at the erstwhile Planning Commission, said: “In spite of much lower global oil demand, the restricted supplies and production cuts by oil exporting countries are some of the major reasons for high oil prices. Brent prices averaged at US $49.86 per barrel in December 2020 and today it is US $63.5 per barrel. An increase of 27.5% within oneand-a-half month is too sharp even at a time when the Covid-19 pandemic is not subdued and a number of European countries are under partial lockdown.”
“It is believed that a gradual production increase was part of the agenda with 0.5 million barrels per day in the January 4 meeting of OPEC. However, subsequent to the meeting, Saudi Arabia announced 1 million barrels per day of voluntary oil production cuts. In a situation when markets are recovering globally, such a high production cut could be one of the reasons for a price spike in a short period of time,” he said.
Countries like India are impacted by such a sharp increase of global oil prices where oil demand has grown much faster, he added. Experts say that a duty cut is not a viable solution at a time when country needs revenue to boost growth.
The government official mentioned above ruled out any immediate cut on central excise to provide relief to consumers from rising fuel rates citing revenue concerns. “India’s fiscal deficit is quite high at 9.5% of GDP [gross domestic product] in 2020-21 because the Covid-19 pandemic hit its economy. The Budget has also proposed ₹12 lakh crore borrowings in FY-22 that would mean a high fiscal deficit of 6.8% next fiscal year. Under these circumstances the government have no space to immediately cut excise duties of petrol and diesel,” the official said.
“There is a need to join hands with major oil importing nations like China, India, Japan and Korea to look for a workable solution with the oil exporting countries so that economic recoveries are smooth with adequate supply of oil by OPEC+ countries. Any voluntary production cuts to raise oil prices as announced by Saudi Arabia could lead to an uncertainty of supplies,” Sharma said.
The Budget on February 1 imposed an agriculture Infrastructure and Development Cess (AIDC) of ₹2.5 per litre on petrol and ₹4 per litre on diesel, after reducing central excise on them by same quantum to keep the total central tax unchanged. Currently, central levy on petrol is ₹32.90 per litre and diesel is ₹31.80, almost close to their basic prices (excluding freight cost, dealer commission and state levies).
According to Indian Oil Corporation, basic price of petrol and diesel on February 16 was ₹31.82 and ₹33.46 per litre, respectively.
Modi said his government is sensitive to concerns of the middle-class and so has focussed on raising share of ethanol mixing in petrol. India, he said, is looking to cut energy import dependence as well as diversify its sources to reduce risks. The focus now is also towards using renewable sources of energy, which will by 2030 form 40% of energy generated in the country, he said in Tamil Nadu.
Maharashtra is seeing a resurgence of Covid-19 cases again, weeks after the state government relaxed some restrictions, including the wider opening of the Mumbai local trains. The spike is particularly noticeable in Mumbai and its surrounding areas, and has been attributed by experts to the resumption of trains, relaxation of curbs and the laxity in Covid-19-appropriate behaviour. The seven-day average of daily infections in the state (also referred to as the case trajectory of a region) has increased by 800 cases a day in the last six days. It was 2,415 for the week ending January 11 (the lowest since May), and has touched 3,215 on January 17. This is a worrying trend for a state that has been worst-hit by Covid-19 in the country by a massive margin.
This rise has coincided with the detection of the two mutations of the Sars-CoV-2 virus in India. Scientists fear this can make vaccines less effective and trigger re-infections. India now has all three of the coronavirus variants that have caused a massive resurgence of cases globally — B.1.1.7, first discovered in the United Kingdom; B.1.351, dominant in South Africa; and P.1, from Brazil. These have a unique collection of mutations, which make them spread more readily or cheat vaccine-immunity.
An increase in cases in hotspots such as Maharashtra, coupled with the presence of more dangerous variants in the country, generates fears that the pandemic may begin a much-feared second wave. Complacency now, among governments and people alike, when a vaccine roll-out is underway and cases nationwide are at the lowest level in over eight months, can undo months of progress and sacrifices made in the fight against the disease.
NEW DELHI: The railways has deployed 20 additional companies of the RPSF across the country, with focus on Punjab, Haryana, Uttar Pradesh and West Bengal, in the wake of the “rail roko” called on Thursday by farmer groups protesting against the Centre’s new agri laws. Director General, Railway Protection Force, Arun Kumar on Wednesday said, “I appeal to everyone to maintain peace. We will be liaisoning with district administrations and will have a control room in place.”