Diesel hits all-time high in city
Calcutta: Diesel prices rocketed to an all-time high of Rs 63.84 a litre in Calcutta on Friday following a sustained rally in international crude prices, stoking fears of inflation.
"The surging crude prices will put pressure on inflation, balance of payments and fiscal policy. We believe the rally (by crude oil) is likely to continue till March for certain until the winter demand subsides and clarity is reached on the production plans in the US," rating agency Icra said in a note.
The previous record for Calcutta was Rs 63.81 a litre, as of August 31, 2014. But the average prices of the Indian basket of crude oil was $101.89 per barrel in August 2014 --- 62 per cent higher than the December 2017 figure of $62.69 a barrel. (The January 12, 2018, figure should be higher but the government has stopped providing daily updates.)
In August 2014, however, there existed central subsidies that were abolished in favour of market-driven pricing from October 2014.
Global crude prices remained benign after that and crashed to a record low of $28.08 a barrel (Indian crude basket, a mix of import and local production) in January 2016. But the Narendra Modi government did not fully pass on the benefit to the consumer, raising excise duty.
The government reduced the excise duty by Rs 2 a litre both on petrol and diesel on October 2 ahead of the Himachal Pradesh and Gujarat Assembly elections. But the gains to the customer have since then been erased by steep international crude prices.
The Centre earns Rs 15.33 a litre as excise duty on diesel and Rs 19.48 per litre on petrol. In Bengal, the state government imposes a cess and 25 per cent VAT on petrol (Rs 14.84 a litre) and 17 per cent on diesel (Rs 9.56 a litre).# "Prices are fixed at an import parity basis tailing the international product prices (petrol and diesel). Even though petrol prices are globally lower than those of diesel, it is the opposite in India because of higher duties," an oil industry executive said.