Well, petrol rates are rising again and people are not going to be happy. There are demands for Central Government to roll back the prices. But, is the reality that simple?
So, how is petrol price calculated, first of all?
Cost of a barrel of petrol + Operational cost for OMCs + Distributor commission + Central taxes + State taxes
What is state share in taxes? State taxes + Central Devolution of it’s share.
According to the recent Finance Commission recommendation, this stands at 42% of total central share of taxes.
Below are the souces which I am considering for this.
Considering the numbers and calculations, this is what we land at(some minor tax heads are ignored).
Cost per barrel: $80
Dollar Exchange Rate: Rs 68.37
OMC Cost: Rs 5.93
Bihar has an extra 30% and West Bengal, additional 20% surcharge on state collections.
Madhya Pradesh, Punjab, Delhi, Haryana, Gujarat, Meghalaya and all Union Territories collect VAT on Dealer’s Commission.
Central share of income is appx 12.34 at $80/barrel crude oil while state shares range from 24.97 to 34.75 for the big states. The colour code is to denote whether the state is ruled by NDA or not(Bihar was out of BJP till very recently). So, the question for us is, targetting which head makes more sense? State or Central?
Note: It looks as if there is a subsidy of 5-6 rupees already considering these numbers.