Why are petrol, diesel prices rising in India?

Is it just rising global crude oil price that is causing a spike in petrol and diesel prices here? Read on to know what exactly is the reason for your higher fuel bills

January 22, 2021 / 11:03 AM IST
14 fuel_53890662

14 fuel_53890662

The prices of petrol and diesel touched a record high of Rs 85.45 a litre and Rs 75.63 a litre, respectively, in Delhi on January 22. In Mumbai too, fuel rates increased to a new record high of Rs 92.04 a litre on petrol and Rs 82.40 a litre on diesel.

But, why are petrol and diesel prices on the rise?

The price of Brent crude had crashed from $66 per barrel in early 2020 to $19 per barrel in April mainly because of lockdown in various countries and travel restrictions that resulted in lower crude and fuel demand. From that record low, Brent crude prices touched $55.37 a barrel at one point on January 22, 2021.

Also Read: Fuel prices touch record high in Delhi, Mumbai

The government had raised excise duty in March when crude oil prices were down. The excise duty on petrol was raised to Rs 32.98 per litre from Rs 19.98 and diesel to Rs 31.83 per litre from Rs 15.83. Every Re 1 a litre increase in excise duty adds approximately Rs 14,500 crore to the government’s kitty.


When the economy was at a standstill due to lockdown, several state governments too had increased duties to boost their revenue. At present, taxes contribute 62 percent of the prices of petrol and 57 percent on diesel in Delhi. It is the higher taxes, along with rising global crude oil prices that led to the current spike in petrol and diesel prices in India.

Also Read: Fuel-o-nomics: Check out the costs and taxes that add up to your fuel bill

According to sources close to the development, the government is in talks to cut excise duty and the ministry of petroleum and natural gas has already suggested the finance ministry to consider it.

Fuel prices had hit their previous highs in October 2018 when crude oil prices had touched nearly $80 a barrel.
Shine Jacob
first published: Jan 22, 2021 11:02 am

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