Petrol price likely to rise by Rs4 per litre, diesel may see slight reduction

The price of petrol is expected to increase by around Rs4 to Rs4.50 per litre from March 1, while high-speed diesel (HSD) may see a marginal decrease, reflecting fluctuations in international oil prices and exchange rates. 

The final adjustments will be determined on February 28 based on Brent crude prices and the rupee-dollar exchange rate.

Currently, the ex-depot petrol price stands at Rs256.13 per litre, while HSD is priced at Rs263.95 per litre. Kerosene, with an official rate of Rs171.65 per litre, is being sold in the market at significantly higher rates ranging between Rs300 and Rs350 per litre.

Petrol is widely used in private vehicles, motorcycles, and small transport, making any price hike a burden on middle and lower-income groups. 

Diesel is crucial for heavy transport, agriculture, and railways, meaning its price fluctuations directly impact inflation and the cost of essential goods.

The government continues to collect approximately Rs76 per litre in taxes on both petrol and diesel, despite keeping the general sales tax (GST) at zero. This includes a petroleum development levy (PDL) of Rs60 per litre and customs duties of Rs16 per litre. Additionally, oil marketing companies and dealers charge about Rs17 per litre in margins on both fuels.

Luxury fuel consumers also face high levies, with light diesel, high-octane blending components, and 95RON petrol carrying a Rs50 per litre petroleum development levy.

Petrol and HSD remain the government’s primary revenue generators, with monthly sales between 700,000 and 800,000 tonnes. By contrast, kerosene demand remains low at around 10,000 tonnes per month.