Petrol and diesel prices were increased for the 11th day in a stretch on Thursday.

Voices against the Centre's taxation on petrol and diesel are gaining currency as fuel prices continued to climb for the 11th day on a stretch on Thursday.

Senior Congress leader and former Union Finance Minister P Chidambaram claimed that the central government could have reduced petrol prices by as much as Rs 25 per litre if it wanted to pass on the benefits of cheaper crude oil to the common people.

The Bharatiya Janata Party (BJP) on its part has blamed the Congress-led UPA governments for exponentially increasing central excise duty in its 10-year-rule.

On social media, an infographic is doing the rounds wherein it is being shown that the average yearly increase in petrol price was far more during the UPA regime, in comparison to the four years under Prime Minister Narendra Modi.

The infographic was also tweeted by BJP's IT Cell chief Amit Malviya on May 22. It has been re-tweeted by more than 1,000 people since then.

The infographic reads: "Prices of petrol increased by just 90 paisa per year between 2014-18 in comparison to [the] whooping Rs 4 per year in UPA's 10 years (sic)".





While the neatly-designed infographic appears convincing at face value, a deeper analysis reveals that it is misleading as it is based on half truths.

India Today decided to verify the claims made by the BJP in this infographic.

Petrol prices vary from one state to the other, however, the said infographic does not mention the city/state the party is referring to.

For the sake of comparing how petrol prices have fared in the last 14 years, we are taking Delhi as a case study.

For this, we have taken the data of crude oil prices and retail prices of petrol from the Petroleum Planning and Analysis Cell (PPAC) of the Union Petroleum Ministry.

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When the UPA-I came to power in May 2004, the price of petrol in Delhi was Rs. 33.71 per litre. Ten years on, when Narendra Modi took over as the PM in May 2014, petrol was priced at Rs. 71.41 per litre in the national capital.

This means the price of petrol witnessed a rise of nearly Rs 38 in the 10 years under the UPA - an average annual increase of Rs 3.80 per year.

This is similar to what the infographic tweeted by Amit Malviya says.

However, the infographic fails to factor in other aspects that determine petrol prices. Fuel prices are primarily dependent on two factors: price of crude oil in the international market and the taxes levied by the central and state governments.

While the taxes are decided by the central and state governments, the price of crude oil is dependent on the international market and currency rates over which they have little say.

Thus, in a hypothetical scenario, if the tax rates remain unchanged, the retail price of petrol will be directly proportionate to the increase or decrease in the price of crude oil.

A fair assessment of increasing fuel prices in the country can be done only when we compare the changes in tax rates vis-à-vis the changes in crude oil prices throughout the past 14 years.

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In our analysis, we have used the average crude oil price and retail price of petrol in Delhi over the past 14 years. This takes into account the value of Indian rupee versus the US dollar.

We have prepared a graph to see how the retail price of petrol changed in comparison to the fluctuations in the crude oil prices. This comparison shows us how the UPA and NDA governments handled fuel prices.

Even as crude oil prices decreased in the international market, retail price of petrol continued to increase. (Photo: IndiaToday.in)

The graph shows that retail price of petrol continued to increase even as the price of crude oil reduced after clocking a high in 2011.

During the past 14 years, the price of crude oil was the lowest in 2004 when the UPA came to power. Back then, crude oil was around USD 25 a barrel and petrol price in Delhi was Rs 33 per litre.

In 2011, the crude oil peaked at around USD 112 per barrel and the retail price of petrol in Delhi then was Rs 65.76 per litre.

The price of crude oil has decreased since 2013-14. (Photo: IndiaToday.in)

In contrast to this, the price of crude oil at present is around USD 88 but the retail price of petrol has soared to Rs 77 per litre.

The present crude oil price is nearly 25 per cent lower than the 2011 rate when Manmohan Singh was in power.

The data also shows that crude oil prices started decreasing after 2014 but the retail prices have not witnessed a similar trend. In fact, in 2015-16, crude oil hit a low of USD 46 per barrel but price of petrol still continued to increase.

The fact that retail prices have not decreased despite decrease in crude oil outlines the fact that the Centre has not reduced the tax rates on petrol to pass on the benefit to the common people.

In the four years, petrol prices have perpetually increased as the Modi government constantly increased the central excise duty for petrol from Rs 9.48 per litre in 2014 to a peak of Rs 21.48 in January 2016.

When the crude prices started climbing again, excise duty was cut by Rs 2 per liter on October 4, 2017. At present, it stands at Rs 19.48.

In summation, in the past four years, the excise duty has been increased by 126 per cent in case of petrol and 330 per cent for diesel.

Thus the claim that petrol prices rose by just 90 paise per year during the past four years is true to some extent but doesn't give the full picture.

However, it is not only the Modi-led central government that is to be blamed for increasing fuel prices in the country. The state governments are equally responsible. If the state governments are so concerned about the people, they can reduce the prices of petrol and diesel by reducing the VAT and other taxes levied by them.

However, it is apparent that neither the state governments nor the Centre is interested in doing this as an increased tax rate ensures that the governments' coffers are filled.

For instance, between 2010 and 2016, the Delhi government increased the VAT on petrol from 12.5 per cent to 27 per cent.

The inconvenient fact thus is that had the Modi government and the state governments not tinkered with the tax rates even at the 2014 level, petrol would have been priced at about Rs 65 per litre in Delhi.

(With inputs from Arjun Deodia.)

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