Petrol Crosses Rs 100 A Litre—More Than Half Of What You Pay Is Taxes

Nagarabandh in Madhya Pradesh is now an unwelcome milestone on India's fuel map. It's at least one place where unleaded petrol now retails at more than Rs 100 a litre.

Costlier crude is only partly to blame as 35-42% of the retail price is linked to the oil benchmarks. The rest is largely central and state taxes.

Brent crude fell to a low of $19 a barrel in April last year, tumbling more than 70% from the start of 2020 as lockdowns disrupted the global economy. Indian consumers didn’t benefit as the government used the opportunity to increase taxes to shore up revenue. The Modi administration hiked excise duty in two tranches—by Rs 13 per litre on petrol and Rs 16 per litre on diesel. Some states, too, increased value-added tax.

The hike helped the central government’s excise revenue swell 54% over a year earlier to Rs 2.36 lakh crore during April-December 2020, according to data from Controller General of Accounts.

But the taxes didn’t come down when the crude started rising. Now they account for more than half of the price at the pump. And levies are much higher than the base price of fuel.

In the national capital Delhi—for which full price break-up is available—petrol and diesel stood at a record Rs 89.29 and Rs 79.7 per litre, respectively, on Feb. 16. According to the price break-up by Indian Oil:

• In Delhi, nearly 60% of what a consumer pays at the filling station goes to the government in taxes.
• On diesel, taxes account for 54.6%.

Prices in Delhi are still lower than in Nagarabandh and Ganganagar. Meaning, state levies in Madhya Pradesh and Rajasthan are relatively higher.