Why prices of petrol are high in india

Since then, the cost of diesel has gone up by Rs 6. Fuel prices vary in states due to different value-added tax and freight charges. Oil companies revise the fuel prices on the basis of the cost of benchmark fuel in the international market and foreign exchange rates. Thus, a rise in international oil prices directly influences national fuel rates. Under the National Policy on Biofuels , the government emphasised achieving energy security of the country with a target of reducing import dependence.

However, Santosh Mehrotra, economist and visiting professor at Centre for Development, University of Bath, United Kingdom and former professor of Economics, Jawaharlal Nehru University in New Delhi, said implementation of alternative fuels will take time. There is no logic in increasing fuel prices that are currently in use.

But this is not the right time to do that, because the central tax revenues are falling on account of the contraction of the economy. This article first appeared on FactChecker. Share your perspective on this article with a post on ScrollStack, and send it to your followers. Contribute Now. What has happened? Computing fuel price In , the prices of petrol were determined by the government and were revised every fortnight. There are mainly four factors that influence the rise in prices: Crude oil, freight and processing charges to the dealer.

Excise duty charged by the government. Dealer commission to the gas station. Value Added Tax levied by the state government. Source: IOCL High taxes While international crude oil prices determine the cost of fuels in India, it is only one factor contributing to the rise in petrol and diesel.

Way forward The central government has been pushing alternative ways to reduce the cost of fuel prices. They are issued if the government is in danger of breaching the fiscal deficit target and aims to delay the fiscal burden of such a payout to future years. Petrol and diesel were being sold at lower than the international market price before the complete deregulation of rates. Never miss a story! Stay connected and informed with Mint.

Download our App Now!! It'll just take a moment. Looks like you have exceeded the limit to bookmark the image. The price of petrol in the national capital is Rs India has seen a faster recovery in the consumption of petrol than of diesel after pandemic-related restrictions with petrol consumption up 9 per cent in September compared to the year ago period but diesel consumption remaining 6. Diesel accounts for about 38 per cent of petroleum product consumption in India and is a key fuel used in industry and agriculture.

The government says it has been reaching out to key oil producing countries, asking them to boost production of crude oil. Also, the level of output and pricing benchmarks are decided by cartels such as OPEC. In March, then petroleum minister Dharmendra Pradhan had said that India would source crude from whichever country gives India the best price and business terms.