Exploring trends of petrol and diesel prices in India, Pakistan

Triggered by a surge in sales tax or the Value Added Tax (VAT) from 25 per cent to 27 per cent, the petrol price in the Indian capital of New Delhi has been increased by 96 paisa per litre to rest at Rs 59.99 per litre as against Rs59.03 a litre previously.

The VAT on diesel has been increased from 16.6 per cent to 18 per cent. A pollution cess of Rs 0.25 per litre has also been levied on diesel.

After a 53 paisa per litre increase, diesel will cost Rs44.71 in New Delhi now as opposed to Rs44.18 previously.

Research conducted by the "Jang Group and Geo Television Network" reveals that in 1989, price of per litre petrol in New Delhi was just Rs8.50, it was Rs12.23 in October 1990, Rs14.62 in July 1992, Rs16.78 in February 1994, Rs21.13 in July 1996, Rs22.84 in September 1997, Rs23.94 in June 1998, Rs28.70 in November 2000, Rs28.91 in December 2002, Rs32.70 in December 2003, Rs37.84 in November 2004, Rs43.49 in September 2005, Rs44.85 in November 2006, Rs43.52 in June 2007, Rs45.62 in December 2008, Rs44.72 in October 2009 and Rs51.43 in June 2010.

Unlike Pakistan, the fuel oil prices in India are not the same in all states and cities, mainly because of the tax components at different levels.

Just a few days ago on January 15, 2016, the petrol price was cut by 32 paise per litre and diesel rate lowered by 85 paisa per litre even as the government hiked excise duty on both the fuels for the second time this month to raise an additional Rs37 billion in its bid to achieve the targeted fiscal deficit.

The reduction in the price of petrol and diesel was much lower than what crude oil prices - which had fallen to below $30 per barrel - had warranted.

This was the fourth reduction in rates in six weeks.

On January 15, the petrol price in Delhi was Rs59.03 per litre as against Rs 59.35 per litre previously.

A litre of diesel on January 15 was costing cost Rs44.18 as against Rs45.03 previously.

The excise duty hike - the second during January 2016 and fourth since November 2014 - was expected to help the government net an additional Rs37 billion during the remainder of the fiscal year ending March 31, 2016.

On January 1, 2015, the price of petrol was cut by 63 paisa per litre while that of diesel was lowered by Rs1.06 a litre.

It is worth recalling that on July 16, 2015, when petrol and diesel prices were slashed nationwide by Rs2, the tariff in Delhi had gone up due to VAT.

“The Indian Express" had reported on July 16, 2015: "The raise, effective from midnight, is the first hike in Value Added Tax affected by Aam Aadmi Party government since capturing power in Delhi. The VAT rate on petrol has been increased from 20 per cent to 25 per cent and on diesel from 12.5 per cent to 16.6 per cent, thereby resulting increase in the price of petrol by Rs2.78 per litre (approximately) and in the price of diesel Rs1.83 per litre. After the increase in retail prices of petrol and diesel in Delhi, the retail price for petrol will be Rs69.43 per litre (approximately) and the same for diesel will be Rs52.07 per litre approximately."

The premier Indian newspaper had added: "The Delhi Assembly had on June 30 (2015) cleared VAT Amendment Bill, tabled by Arvind Kejriwal’s government, which allowed it to increase VAT up to 30 per cent on 11 goods including petroleum products, tobacco and aerated drinks."

Research further shows that between November 2015 and January 3, 2016, the Indian government had increased excise duty on petrol and diesel a few times to mop up over Rs100 billion to meet its budgetary deficit.

The Press Trust of India had reported on January 03, 2016 that in order to raise Rs44 billion, the Indian government had raised excise duty on petrol by Re0.37 per litre and by Rs2 litre on diesel.

The additional Rs44 billion revenues had included Rs43 billion raised through diesel and about Rs800 million through petrol.

However, there was no increase in retail selling price of petrol and diesel as state-owned oil firms had not passed on the full benefit of a reduction in international oil prices to consumers on January 1.

According to a notification of the Indian Central Board of Excise and Customs, the basic excise duty on unbranded or normal petrol had been increased from Rs7.36 per litre to Rs7.73 and the same on unbranded diesel from Rs5.83 to Rs7.83 per litre.

The NDTV had reported on January 3, 2016: "Prior to these, the government had in four installments raised excise duty on petrol and diesel between November 2014 and January 2015 to lessen the reduction in retail rates, which followed falling international oil rates."

The leading Indian television had stated that the four excise duty hikes during this period totalled Rs 7.75 per litre on petrol and Rs6.50 a litre on diesel, adding it had led to about Rs200 billion in additional revenue to the government.

The NDTV had maintained: "The government had collected Rs99,184 crore in excise collections from the petroleum sector in 2014-15, which stood at Rs 33,042 crore in the first quarter of the current fiscal."

Before this, the government had raised excise duty on petrol by Rs 0.30 per litre and Rs 1.17 a litre on diesel with effect from December 17, 2015 to garner Rs25 billion.

On November 15, 2015, the state-run Indian Oil Corporation had announced a hike in the price of petrol by 36 paisas a litre and of diesel by 87 paisas at Delhi, effective midnight. With this hike, petrol in Delhi will now cost Rs. 61.06/litre, while diesel will come at Rs. 46.80/litre.

(courtesy: The Times of India)

 And on November 7, 2015, excise duty on petrol and diesel was enhanced by Rs 1.60 per litre and 30 paisa per litre respectively to raise Rs32 billion. However, the state-owned oil companies had decided to absorb the raise for the time being.

In India, the state-owned fuel retailers Indian Oil, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) revise rates of petrol and diesel on the 1st and 16th of every month based on average oil price and foreign exchange rate in the preceding fortnight.

By the way, in Indian Punjab, petrol is more expensive that all other Indian cities and the residents of this state have been crying hoarse over this disparity for long now.

In its May 29, 2015 edition, the "Times of India" had reported: "Petrol in Punjab has become the costliest in the country after the recent increase of Re 1 in infrastructure development (ID) fee in the state. Till now, the tax component on petrol was highest in Karnataka at 31 per cent (26 per cent sales tax and 5 per cent entry tax) and Punjab was at the second spot with 30.5 per cent VAT, which has now gone up to 32.1 per cent. End consumers have to shell out Rs 75.85 per litre for petrol in Punjab and the price is Rs 72.94 per litre in Karnataka."

Coming to Pakistan, the oil prices have not shown any big drop as yet because the government has often raised taxes to meet its budgetary target.

On November 1, 2015, while partially adjusting the impact of rising global oil prices in taxes for November, the government had announced a hike in the prices of petrol and High Speed Diesel (HSD) but had kept the rates of kerosene oil, High Octane Blending Component (HOBC) and Light Diesel Oil (LDO) unchanged.

The petrol price was increased by Rs2.50 per litre from Rs73.76 to rest at Rs76.26 per litre.

Interestingly, the Oil and Gas Regulatory Authority (Ogra) had also recommended an increase of Rs5.73 per litre in the price of HOBC, a fuel used in luxury cars, but the government did not grant the hike.

On August 31, 2015, the government had announced reduction in prices of petroleum products by Rs3 a litre on all denominations.

The price of Light Diesel Oil had also been lowered by Rs3 per liter from Rs56.59 per liter to Rs 53.59 per litre.

On June 1, 2015, the prices of all petroleum products in Pakistan were increased by about Rs3.50 per litre for the month of June.

The price of petrol was thus increased by Rs3.50 to Rs77.79 from Rs74.29 per litre. The levy on petrol was reduced from Rs10 to Rs8.30 per litre, but the GST was increased by two per cent.

The price of high speed diesel (HSD) was raised by Rs3.51 to Rs87.12 from Rs83.41 per litre. Petroleum levy on HSD was slightly brought down to Rs7.76 from Rs8 per litre and the GST by four per cent.

The price of kerosene was increased by Rs3.50 to Rs64.94 from Rs61.44 per litre. The GST on kerosene was kept unchanged and petroleum levy reduced from Rs6 to Rs3.41 per litre.

The government said it had borne the brunt of Rs6 billion revenue losses by passing on to consumers only half of the increase recommended by Ogra.

On March 31, 2015, the government had increased the petrol price by Rs4 and diesel by Rs3, while kerosene oil’s price had remained unchanged.

The new price for petrol was Rs74.29, while the price of diesel had stood at Rs86.86.

On February 1, 2015, the Federal Information Minister, Pervaiz Rashid, had stated that the country had the lowest per litre price of petrol in the South Asian region.

He was justifying an increase in sales tax by saying that when the petrol price was Rs107.97 per litre, consumers had to pay Rs18.36 of tax per litre.

Pervaiz Rashid had said the government used to get Rs68 billion in terms of revenue collection from petroleum products, which had now been reduced to Rs28 billion.

In January 2015, the petrol and diesel prices in Pakistan had stood at Rs78.3 and Rs86.23 per litre respectively.

It is imperative to recall that on September 24, 2012, the price of petrol in Pakistan had rested at Rs108.45 per litre.