New Delhi: While the Centre seems to be working overtime for days to find a long-term solution to the spurt in retail prices of petrol and diesel, each day of delay is contributing thousands of crores of rupees to the coffers of the central and state governments.
The additional revenue is a huge burden on consumers who pay higher prices for auto fuels. Prices have increased consistently between 20 paise and 30 paise per litre each day for the last 16 days, taking retail prices of both petrol and diesel to record high levels. Petrol price is Rs 78.43 a litre and diesel Rs 69.31 per litre in Delhi.
According to the Petroleum Planning & Analysis Cell (PPAC) in the oil ministry, the Centre has earned a staggering Rs 2,42,691 crore as excise duty from the petroleum sector in FY17. It is set to surpass the mark in FY18, thanks to overall growth in consumption.
This means Rs 665 crore as revenue from excise on oil per day. In the last seven days — the time taken in finding a solution for high fuel prices — the Centre would have earned Rs 4,655 crore. During the same period, consumers have been loaded with additional burden to the tune of Rs 2.5 a litre on petrol and Rs 2 per litre on diesel.
While the Centre has taken the lion’s share of the taxes on petrol and diesel by virtue of increase in rates on nine occasions between November 2014 and January 2016, states have also benefited enormously from taxes on auto fuel.
The gain for states have also increased proportionately in FY18 and two-month period of FY19 as their rates are levied on ad-valorem (a percentage of the value of product) basis that basically means the tax collections increase if there is an increase in basic price of petrol and diesel.
In FY18 and even now price of products have risen sharply as indicated by almost doubling of crude oil prices in just over one-year time.
Together the states earned Rs 1,66,378 crore as VAT/sales tax collections by taking petrol and diesel in FY17 and have reached Rs 1,31,732 collections in the nine-month period ending December of FY18. Going by this yardstick states earn roughly Rs 456 crore per day a revenue from the oil sector and have earned more than Rs 3,191 crore in last seven days.
If we take the period right after conclusion of Karnataka polls, after which daily price revision of petrol and diesel was restarted by oil marketing companies, the gain for the Centre would go up to a staggering Rs 10,000 crore and states close to Rs 6,500 crore. Since May 13, consumers have seen petrol price rising by Rs 3.80 and diesel by Rs 3.38 in Delhi. It is interesting to note that states used to be ahead of Centre in terms of tax collections from the oil sector till FY15 but the trend suddenly changed from FY 16 onwards after the full impact of nine increases in excise duty effected by the Centre.
This increased excise burden on petrol and diesel by a whopping 127 per cent and 387 per cent respectively that helped the Centre to more than double its excise mop-up to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre since November 2014.