Timeline of petrol, diesel price hike: How rates have risen by Rs 7.5 litre in just 11 days – which cities have highest prices?

Economists are of the view that if global crude oil prices remain high, a hike in petrol and diesel prices every few days may be the new reality. (AI image)

Petrol and diesel prices were increased again on Monday by Rs 2.61–2.71 per litre as state-run fuel retailers continued to pass on the impact of rising global crude oil prices to consumers. Petrol and diesel prices have now reached their highest levels since May 2022.Fuel prices had largely remained unchanged since April 2022, except for a Rs 2 per litre reduction announced in March 2024 ahead of the national elections. Economists are of the view that if global crude oil prices remain high, a hike in petrol and diesel prices every few days may be the new reality. A few weeks ago the government cut the excise duty on both petrol and diesel to avoid a pass on of higher crude oil prices to consumers, but the persistently high international rates have led to the hike. According to Finance minister Nirmala Sitharaman, the cut in excise duties on petrol and diesel will lead to revenue impact of Rs 1 lakh crore. The successive hikes come after an extended period during which retail fuel prices remained unchanged, despite higher global crude prices, shrinking refining margins, and weakness in the rupee significantly increasing import costs.The sharp rise has intensified concerns around inflation and higher transportation costs across the economy after fuel price revisions resumed following a long freeze.

Fourth Petrol Price Hike in 11 Days

Which cities have the highest petrol, diesel prices?

States urged to cut VAT

Fuel prices differ across states because of variations in local taxes. The recent increases have only marginally reduced the under-recoveries faced by oil marketing companies. This has intensified pressure on state governments to reduce Value Added Tax (VAT), which in some states is as high as 30%.While oil companies continue to face financial strain, the Centre has already absorbed part of the burden through cuts in excise duty.Consumers, meanwhile, are paying higher prices to shoulder a portion of the rising costs, leaving states under pressure to sacrifice some of their tax revenues so that fuel retailers retain enough funds to sustain operations and continue investments.States with the lowest VAT rates levy taxes of around 20%, while others impose rates over 30% through additional per-litre charges and infrastructure cess components.Also Read | US-Iran war: Will rupee hit 100 versus US dollar soon?States such as Tamil Nadu, Kerala, and West Bengal continue to record among the highest fuel prices largely because of state-level taxes, with Telangana and Kerala having the costliest pump rates.Although discussions have taken place in the past regarding bringing petrol and diesel under the GST framework, states across party lines have opposed the proposal.Apart from excise duty on liquor, VAT collected on fuel remains one of the largest independent revenue sources for states.

Why are petrol, diesel prices rising?

The repeated increases follow a sharp rise of more than 50% in global crude oil prices since late February after US-Israeli strikes on Iran and disruptions in shipments through the Strait of Hormuz, a vital route for global oil transportation.During the initial two-and-a-half months of the conflict, fuel retailers had kept pump prices unchanged despite rising input costs, with the government saying the move was intended to shield consumers from inflationary pressure. Opposition parties, however, accused the Centre of postponing fuel price hikes until after important state elections.State-owned fuel retailers, Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, together account for nearly 90% of India’s fuel retail market.Whenever state-run fuel retailers revised prices upward, private companies such as Nayara Energy quickly matched the increases with similar hikes in petrol and diesel prices.These revisions came in addition to earlier hikes implemented by private retailers before the first PSU-led fuel price increase on May 15. Nayara Energy had raised petrol and diesel prices by Rs 5 and Rs 3 per litre, respectively, in March, while Shell increased petrol prices by Rs 7.41 per litre and diesel rates by as much as Rs 25 per litre from April 1.Meanwhile, Jio-bp — the fuel retail joint venture between Reliance Industries and BP — has continued to align fuel prices at its outlets with those of public sector companies.