This has pushed up the retail rates, which differ from state to state depending on the incidence of local sales tax or VAT and freight charges.
The hike took the petrol price in Delhi to ₹90.83 per litre. Diesel rate climbed to ₹81.32 a litre.
The rates were stable on Monday, with petrol at ₹90.58 per litre in the national capital and diesel at ₹80.97. The price of petrol in Mumbai was unchanged at ₹97 for a litre. The price of diesel remains at ₹88 for a litre.
Why are the rates spiking?
Part of the reason is recovering crude oil prices, even as central and state taxes remain a pain point. These taxes were raised last year as the pandemic dried up other revenue sources for the government.
The elevated taxes kept fuel prices up in India even though crude oil prices had crashed and stayed low for much of 2020.
The current petrol price break-up in Delhi shows 60% of what you pay at the gas station goes as excise duty and value-added tax. Just about 40% is the price of crude oil.
Indian consumers did not get the benefit of falling international prices of oil last year. Now, recovering crude prices are pushing petrol prices further up. If taxes remain where they are, relief for the end consumer may be some time away.
Need for unwinding high indirect taxes: RBI Governor
Reserve Bank of India governor Shaktikanta Das has called for reduced indirect taxes on petrol and diesel to contain the fuel prices at a reasonable level.
"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," Das said.
"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 a further build-up of cost-pressures in the economy," he added.