State-run fuel retailers on Thursday cut diesel rates by 20 paise a litre for the second day in a row that took the total reduction to 40 paise from Wednesday, a 0.44% fall from its record level, but kept petrol rates unchanged even as international oil prices plunged 2.8% in these two days due to demand concerns.
Diesel rates started falling from Wednesday after being frozen at the historical high of ₹89.87 a litre for 37 days since July 12. While diesel is now sold at ₹89.47 per litre in Delhi, petrol prices are still frozen at record ₹101.84 a litre for the last 34 days since July 17.
While fuel rates of state-run Indian Oil Corporation’s (IOC) pumps in Delhi are the benchmark for the entire country, retail prices of the two fuels differ from place to place because of variations in state taxes and local levies.
International oil prices fell for a sixth day on Thursday amid worries of surging Covid-19 cases and increased supplies of crude oil in the market from large producers, including the US. On Thursday, intraday trade benchmark Brent crude fell over 1.65% to $67.1 a barrel.
While international oil prices impact pump rates of auto fuels because India imports more than 80% crude it processes, steep taxes are the other reason for high rates of petrol and diesel.
In Delhi, central levies account for 32.3% of petrol’s price and state taxes, 23.07%, according to an official data of August 1. On diesel, Central taxes are over 35.38% while state taxes are about 14.62%.
Through 2020, as global crude prices fell, the central government raised excise duty on the fuel to shore up its finances. States too followed suit — with revenues hit on account of the pandemic. According to official data, petroleum sector contributed ₹3,71,726 crore central excise revenue in 2020-21, and ₹2,02,937 crore state levies or value added tax (VAT).