The appreciation of dollar against rupee has also pushed up rates for compressed natural gas (CNG) as well as piped natural gas (PNG) since the price of gas procured by city distributors is mostly dollar-denominated.
The department said the sustained hikes in fuel prices over the past few months have placed a strain on consumers. The excise duty has remained unchanged for the past four months but the Value-Added Tax applied on diesel today is Rs 10.12 per litre and that on petrol is Rs 16.42 per litre.
Diesel can be purchased at a price of Rs 75.74 per litre in Mumbai today.
The rupee collapsed to a new lifetime low of 71.21 against the U.S. dollar, while petrol prices rose to a new high of Rs 86.56 a litre in Mumbai on Monday.
Union minister of Petroleum and Natural Gas, Dharmendra Pradhan, blamed the "isolated" policies of the United States for the "abnormally" rising fuel prices in the country. "OPEC (Organisation of the Petroleum Exporting Countries) had promised that it will raise production by one million barrels per day, which was not raised". Due to sanctions on Tehran from the US, India had to reduce its imports from Iran, subsequently reducing the total fuel availability in the country.
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Explaining the causes behind the recent hike in fuel prices, the Minister said: "I would like to mention two points, and both these subjects are external". There is a pressure on oil prices due to decrease in production.
Trend of petrol prices since the beginning August. "Secondly, global currencies have weakened against the United States dollar", he had said.
Any rally in global crude oil price will impact India's oil import bill and trade deficit as every dollar increase in oil prices would impact import bill by around ₹10,700 crore on an annual basis.
Roodt said he thinks the government has drawn on crude oil reserves that "had been hidden somewhere" or "they had a spare pot of cash somewhere in the ministry" to make the intervention possible.
Internal factors: These include rising prices in crude oil, transport costs, and taxes and levies.