Petrol, diesel price hike: RBI governor calls for reduced indirect taxes on fuel

Reserve Bank of India governor Shaktikanta Das called for reduced indirect taxes on petrol and diesel to contain the fuel prices at a reasonable level. Petrol and diesel prices in India have witnessed a steep climb since the past one week. "CPI inflation excluding food and fuel remained elevated at 5.5% in December, due to inflationary impact of rising crude oil prices and high indirect tax rates on petrol and diesel, and pick-up in inflation of key goods and services, particularly in transport and health categories," RBI governor said in the MPC minutes, published on Monday.

"Proactive supply side measures, particularly in enabling a calibrated unwinding of high indirect taxes on petrol and diesel – in a co-ordinated manner by centre and states – are critical to contain further build-up of cost-pressures in the economy," he further mentioned. Central and state taxes make up for 60% of the retail selling price of petrol and over 54% of diesel.

Petrol and diesel prices in the country remained unchanged for the second consecutive day on Monday. On 20 February, petrol price was hiked by record 39 paise per litre and diesel by 37 paise a litre. This was the largest daily increase since oil companies started to revise rates on a daily basis in 2017.

Petrol price touched an all-time high of ₹97 per litre in Mumbai while diesel rate crossed ₹88 -mark. In Delhi, petrol price increased to ₹90.58 a litre. Diesel price rose to ₹80.97 a litre in the national capital. Petrol price already surged past the ₹100-mark in some places in Rajasthan and Madhya Pradesh.

Petrol and diesel prices are revised on a daily basis in line with benchmark international price and foreign exchange rates.

Commenting on the hike in fuel price, finance minister Nirmala Sitharaman said on Saturday, "It's a vexatious issue in which no answer except for fall in fuel price will convince anyone." "It is also a fact that (global) crude rate has been recovering from November," she added. "Both Centre and state should talk to bring down retail fuel price at a reasonable level for consumers," she mentioned.