The 16th consecutive hike (as of Monday) in oil prices which is giving the common man sleepless nights, is actually helping the Centre shore up its falling revenues.
In the time of crisis, the Centre has always seen petrol as its cash cow and the COVID-19 pandemic is no exception.
While the last revision of taxes in May gave the government an additional revenue of ₹2 lakh crore (The Federal had reported how the NDA government has used petrol as its cash cow since 2014), the Centre now earns ₹54.29 per each litre of petrol and ₹51.96 for every litre of diesel, sold to customers along with various taxes, according to the Indian Oil Corporation Limited (IOCL).
Currently, the price of petrol stands at ₹79.23 while that of diesel stands at ₹78.27 after the latest hike of 35 paise and 60 paise, respectively on June 21. According to the latest price break-up by IOCL, almost 70 per cent of the money, earned both from petrol and diesel, goes to the government exchequer.
Since the government’s tax revenues have declined over the last three months, it is much more reliant on excise duty, VAT and other taxes collected from the sale of fuel in the country.
The government is now collecting ₹54.29 per litre of petrol, compared to ₹41.37 in March. According to reports, the government has collected more than 2.7 lakh crore of revenue from petroleum products in each year over the last three years.
The total increase in the prices of petrol and diesel stands at 7.97 and 8.88 per litre respectively in the last 15 days. The government increased half-a-rupee on an average per day.
All these rates correspond to the price of petrol in Delhi. Other states have even higher costs according to their local tax regimes. In Mumbai, petrol was sold at ₹86.04 a litre while the same in Chennai and Kolkata was ₹82.27 and ₹80.62 per litre respectively.
There was an 82-day freeze on the fuel prices in the country amid the nationwide lockdown. But after June 1, petroleum companies began the price revision to cover the additional excise duties imposed on them.
The government had also hiked the excise duty by ₹13 in March and May together. However, the retail prices of fuel remained unchanged.