India / Petrol and diesel prices fall for the second straight day

New Delhi: Petrol and diesel prices were slashed for the second time this year after a sharp fall in global crude oil prices. State-run oil marketing companies (OMCs) on Thursday cut petrol and diesel prices by 21 paise and 20 paise, respectively.

After today's cut, a litre of petrol in Delhi costs ₹90.78, down from ₹90.99. Petrol rates have also dropped in other major cities including Kolkata ( ₹90.98), Mumbai ( ₹97.19), Chennai ( ₹92.770), Bengaluru ( ₹93.28), Hyderabad ( ₹( ₹94.39) and Jaipur ( ₹97.31), as per data from Indian Oil Corporation (IOL) website.

Meanwhile, diesel price in Delhi has now come down to ₹81.10, down from ₹81.30 yesterday. It has also dropped in other major cities including Kolkata ( ₹83.98), Mumbai ( ₹88.20), Chennai ( ₹86.10), Jaipur ( ₹89.60), Bengaluru ( ₹85.99) and Hyderabad ( ₹88.45).

While today's drop may not provide sufficient relief to citizens, the fact that OMCs reduced rates after a fall in global oil prices is a positive development.

This is also an indication that if global oil prices fall further, OMCs are likely to pass on the benefit to consumers.

However, the bigger reason behind India’s exorbitant petrol and diesel rates is the high fuel tax levied by the Centre and state governments.

Given the fact that higher fuel prices are affecting demand negatively, a decision should be taken soon on giving tax relief. It may be noted that nearly 60% of the price of petrol and diesel in India comprises taxes.

Experts have highlighted in the past that high fuel prices could contribute to inflationary pressure and ultimately impact India’s economic recovery in the near-term. Higher petrol and diesel prices have already had a cascading impact on essential commodities and services.

While the governmenthas acknowledged this fact, it has not yet given a timeline for cutting high taxes on fuel. It has maintained that taxes collected on fuel is a revenue source for states as well and added that elaborate discussions are needed to come up with a concrete plan to provide relief to citizens.