India mostly meets its oil requirements by importing fuel from other countries. About 80% of our oil requirement is imported. Therefore, oil prices in India are majorly influenced by changes in international prices and global events.
The price of crude oil being imported to India has increased from $64.4 per barrel in April 2021 to $112.87 per barrel in March 2022, leading to a whopping 78 percent increase in the prices in the span of one year.
Further, the crude oil prices in India have increased by 33 percent from January 2022 to April 2022. However, the fuel prices in India are lower than those of other countries which do not produce their oil themselves.
Compared to countries that are more dependent on petrol imports, oil prices in India are the lowest after Turkey. Meanwhile compared to countries that are more dependent on diesel imports, oil prices in India are the lowest after Japan.
Comparison with neighbouring countries
The petrol and diesel prices in Pakistan and Sri Lanka are lower than that in India. However, these low fuel prices are due to the appeasement policies of the respective government which will not be beneficial for their people in the long run.
Comparision with BRICS, ASEAN countries
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Steps taken by the Modi-led BJP government to control international prices
- On November 3, 2021, the central government reduced the excise duty on petrol by Rs 5 and on diesel by Rs 10.
- The revenue left by the central government due to deduction is about Rs 8,700 crore per month and Rs 1 lakh crore annually.
- After this decision by the central government, several state governments reduced their VAT on petrol and diesel. States that reduced VAT rates on an average cut it by Rs 5 per liter for diesel and Rs 6 per liter for petrol.
- Between November 2021 and March 2022, states that cut their VAT on fuel lost a total of Rs 15,969 crore in revenue. Out of this, Rs 11,398 crore was lost in terms of revenue by the BJP ruled states themselves.
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A total of seven states decided not to reduce the VAT on fuel prices under their jurisdiction. These states were – Maharashtra, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala and Jharkhand.
