In theory, the retail petrol prices in India is directly linked to the crude oil prices in the international market. But, in reality, the two prices do not mimic each other. Since 2014, the government has allowed the retail prices to increase whenever the crude prices rise. However, the reverse did not happen. Whenever the crude prices crashed, the government increased the Centre’s excise duty in proportion to the drop, disconnecting the trends in crude and retail prices. Moreover, the government informally asked the oil companies not to increase the prices if polls are approaching, which decoupled the two prices even further. While persistently high excise duties has helped rake in the money for the Centre, this has made fuel prices unaffordable for most Indians. Currently, in many States, Indians pay ₹50 as tax for every ₹100 they pay for petrol
Diverging trends
The chart shows the retail petrol price in Delhi (in ₹) and the crude oil price (Indian basket in $ per barrel) between March 2014 and March 2022
