The government is facing a double whammy of falling rupee and rising international crude prices. The crude oil prices are around the USD 80 per barrel and the rupee is hovering around the 71 levels making imports costlier. The domestic retail prices which are benchmarked against international rates of the fuel are leading to rising prices of petrol and diesel, affecting the common man.
Petrol price has since risen by Rs 4.20 per litre and diesel by Rs 4.53 - the most in any single month since the daily revision in fuel prices was introduced in June last year.
Retail rates have zoomed to new highs after adding excise duty, which is charged by the central government, commission paid to petrol pumps dealers and VAT, charged by state governments. The Centre currently levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. On top of this, states levy Value Added Tax (VAT). Mumbai has the highest VAT of 39.12 per cent on petrol.
According to oil companies, refinery gate price of petrol, without considering any central or state tax and dealers commission, is Rs 40.45 per litre. The same for diesel is Rs 44.28.
With the rise in fuel prices the transportation costs has risen significantly affecting prices of vegetables, milk and other essential commodities.
However, there is a bright spot to it, the rising prices of the highly polluting fuels is discouraging people from buying new vehicles. Even those possessing vehicles are using this non renewable fuel sparingly, leading to a decrease in carbon emmission. The threat of global warming and climate change that is affecting almost everyone on this planet is getting a small boost from the spike in fuel prices.