As an impact of a sudden increase in international prices of crude oil, Petrol and diesel prices may hit an increase of Rs 7 per litre.
It is known that the revision of crude oil is carried once for every 15 days taking into account international prices of crude and the value of the rupee against the dollar.
A big jump in crude oil prices is observed in Indian basket from an average of $44.46 per barrel in November to $53.38 on Tuesday.
Contrary to the assumptions, the government may not hike the prices in a single go as people are already facing some critical consequences of demonetization. India deregulated the price of petrol in 2010 and that of diesel in 2014.
Meanwhile, it is believed that government might pass a hike in crude oil prices to people, though the benefit from lower crude was not fully transmitted to the consumers.
Since ages, the government chose an alternative way to bear the less impact i.e; hike in excise duty whenever crude oil fell by a large margin.
According to statistics, Crude oil prices were at $ 110 per barrel in 2010 against $ 44 per barrel last month. But the fall in prices of petrol and diesel for the common man has been to a lesser extent.
Coming to the respective taxes, it goes like this: The total taxes by Centre on unbranded petrol comes to Rs 21.48 per litre against Rs 9.48 per litre in April, 2014 during UPA II. Delhi government VAT comes to around Rs 14.09 a litre on petrol. This means that petrol which costs Rs 66.10 per litre in Delhi, around Rs 35.57 is only Central and state taxes.
And for Diesel, it goes: total excise duty on diesel is Rs 17.16 per litre against Rs 3.65 per litre in April 2014. Delhi government impose VAT at a rate 17 percent, which means that taxes from 46.5 per cent of the retail price of diesel.