Fuel price will rise next month despite government intervention

Fuel prices hit all-time high, petrol Rs 86.56 per litre in Mumbai

Fuel prices clock record high: Petrol at Rs 86.25 in Mumbai, highest for any metro

The price of the fuel rose by the same amount in Delhi to Rs 79.31, and in Kolkata it costs Rs 82.22 a litre. On that day, the rate in Mumbai was Rs 86.24 per litre.

The Centre is unlikely to cut excise duty on petrol and diesel despite sky-rocekting fuel prices pummelled by a sliding rupee as the government intends to remain focussed on fiscal prudence, a top government official said on Tuesday. Apart from crude oil prices in the global market and the weakening rupee, one of the factors affecting fuel prices is the high value added tax (VAT) in the state of Maharashtra. The excise duty on petrol increased from Rs 9.48 per litre to a high of Rs 21.48 per litre by January 2016. "The dual impact of rising oil prices and depreciating Rupee does not auger well for PSU (public sector unit) oil and gas companies as it will increase their regulatory risks", it said. The cost of petrol in Delhi went up Rs 1.64 per litre, Mumbai Rs 1.63, Chennai Rs 1.72 and Kolkata Rs 1.61 per litre.

Moreover, the price of crude oil has risen by $7 a barrel in the past two weeks due to the growing fears that the United States sanctions on Iran might reduce the supplies. Current account deficit (CAD) is already widening and an excise duty cut will disturb fiscal deficit (target).

Union minister of Petroleum and Natural Gas, Dharmendra Pradhan, blamed the "isolated" policies of the USA for the "abnormally" rising fuel prices in the country. OPEC had said to increase the production of oil by one million barrel per day but it has been two months (July and August) but they have not done this so far. "Apart from that, crises in countries like Venezuela and Iran are increasing". Besides, states levy a value-added tax (VAT), the lowest being in Andaman and Nicobar Islands where a 6% sales tax is charged on both the fuel. "Secondly, global currencies have weakened against the United States dollar", he said. "You can then buy petrol paying a dollar", he said.

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