With the international crude oil rate sliding more than 10 per cent in a fortnight, oil companies in India have now room to cut petrol and diesel prices. Crude oil has fallen to $64 a barrel from $71 a barrel earlier this month as a fresh wave of coronavirus infections across Europe dashed hopes of demand recovery in fuel.
This means that oil marketing companies in India have now room to cut fuel prices from record-high rates in the country.
Domestic fuel prices have remained unchanged since February 27 across the country, with rates of petrol and diesel frozen at Rs 91.17 and 81.47 per litre, respectively, in Delhi. Petrol and diesel prices are up by Rs 7.5 per litre since the beginning of the year.
With fuel prices in India linked to the international crude oil price, OMCs are expected to cut the rates as and when the prices go down globally. However, nothing it cannot be said for certain because OMCs did not pass on the benefit of falling rates to customers during the peak of the Covid-19 pandemic.
Fuel prices in India are among the highest in emerging economies with the Centre refusing to cut taxes and duties account for roughly 60 per cent of the retail price of petrol and diesel in the country.
Even as crude oil prices hit a low during the pandemic lockdown days of last year, it was not passed on to the consumers as the Narendra Modi government twice raised taxes on petrol and diesel to boost sagging tax revenues. However, with crude oil prices rising, the prices are now at a record high after the Centre refused to reverse the tax raise decision.
The Central and state governments have together raised Rs 4.21 lakh crore, despite a significant decline in local fuel demand, from the petroleum sector in the nine months of this fiscal year (April-December 2020).
