The cost of diesel per litre has also been increased to Rs 69.31 per litre in Delhi and Rs 73.79 a litre in Mumbai. While petrol costs Rs 81.06 in Kolkata, Chennai booths have petrol at Rs 81.43 per litre on Tuesday. The government had raised excise duty on petrol by Rs 11.77 a lire and that on diesel by 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October previous year by Rs 2 a litre.
In Mumbai and Chennai, petrol was sold at Rs 85.78 and Rs 80.95 a litre, respectively, up from Rs 85.65 and Rs 80.80 per litre on Friday.
The government had in June last year junked a 15-year old practice of revising rates every fortnight and introduced daily revisions which worked well except periods immediately preceding an election. Former Finance Minister P Chidambaram recently claimed that it was possible for the government to cut up to Rs 25 per litre in petrol prices. The Central government levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel.
Critics of the government say fuel prices were kept in check to woo voters in the southern Indian state. Union Petroleum and Natural Gas Minister Dharmendra Pradhan had earlier assured the public that the government will soon take out a solution to tackle the situation. "This is the most plausible scenario under the current circumstances", the SBI report said. Delhi has the lowest fuel price among all metros and most state capital due to lower incidence of local sales tax or VAT.
If this was the case, diesel prices could further reduce by Rs 3.75 a litre and petrol prices by Rs 5.75 per litre, it said.
"However, if this was to happen, the state will have to forego Rs 34,627 crore of tax revenue / 0.2 per cent of consolidated fiscal deficit of states", said Ecowrap.
It comes as prices at the pumps have already surged to a three-year high.
Fuel prices in the country continue to touch yet another peak for the 16th consecutive day, as petrol is being sold at ₹ 78.43 per litre in Delhi while Mumbai retails it at ₹ 86.24 per litre.