The petrol costs 55.92 per liter in Chennai (as per the Ministry of Petroleum). What makes the petrol cost Rs.55.92?
Ministry of Petroleum, India website has a list of nice reports (Link in the bottom of the page). A quick look in this page reveals the breakdown of the petrol price.
(The ministry of petroleum webpage provided the breakdown only for Delhi. I assumed that the Cost of Petrol, Excise Duty, Customs Duty will be constant across the states and only sales tax will be different. To find breakup in Chennai, I simply added the difference to the Sales Tax)
Description | %age | In Rs. | In Chennai - %age | In Chennai |
Cost of Petrol (Including the Profit) | 51.23 | 26.35 | 47.12 | 26.35 |
Excise Duty (Central) | 28.74 | 14.71 | 26.30 | 14.71 |
Customs Duty (Central) | 3.36 | 1.73 | 3.09 | 1.73 |
Sales Tax (State) | 16.67 | 8.57 | 23.48 | 13.13 |
Price | 51.36 | 55.92 |
Let us compare the %age of tax on petrol with the developed countries
Country | Price of Petrol Per Liter* | %age of tax on this |
France | 1.73 | 60.69% |
Germany | 1.78 | 61.80% |
Italy | 1.75 | 57.14% |
Spain | 1.49 | 51.01% |
UK | 1.78 | 62.36% |
Japan | 1.51 | 45.03% |
Canada | 0.98 | 30.61% |
USA | 0.76 | 14.47% |
India | 1.12 | 48.21% |
One of the reports in the same page (link below) compares the price of Petrol, Diesel and LPG with that of the developed countries and based on that the price is less compare to India only in USA and Canada. All the other European countries, the petrol per liter is pricier.
I do not think that gives a complete picture, although a convenient one! When we are comparing the cost, we should compare that along with the per capita income to see how much of one’s income he or she needs to spend on petrol.
Country | Price of Petrol Per Liter* | Per Capita Income per year** |
France | 1.73 | 33,679 |
Germany | 1.78 | 34,212 |
Italy | 1.75 | 29,109 |
Spain | 1.49 | 29,689 |
UK | 1.78 | 34,619 |
Japan | 1.51 | 32,608 |
Canada | 0.98 | 38,025 |
USA | 0.76 | 46,381 |
India | 1.12 | 2,941 |
The price and income are represented in US $.
The correct comparison would be the %age of monthly income one would spend per month for the consumption of petrol. The consumption of petrol in US is significantly higher because of the sheer size of the country. For this comparison however, let us consider that one spends 20 liters of petrol per month.
Country | Monthly Income | Price of 10 liters of petrol | %age of monthly income |
France | 2,806.58 | 34.6 | 1.23% |
Germany | 2,851.00 | 35.6 | 1.25% |
Italy | 2,425.75 | 35 | 1.44% |
Spain | 2,474.08 | 29.8 | 1.20% |
UK | 2,884.92 | 35.6 | 1.23% |
Japan | 2,717.33 | 30.2 | 1.11% |
Canada | 3,168.75 | 19.6 | 0.62% |
USA | 3,865.08 | 15.2 | 0.39% |
India | 245.08 | 22.4 | 9.14% |
We are spending almost 10% of our income on petrol! The petrol is indeed expensive in India.
Reduction of taxes on the petrol is the only way we can see cheaper petrol price in India.
Please let me know what you think!
#http://ppac.org.in/OPM/Comparision%20of%20Total%20and%20Ex-Tax%20Price%20of%20Petrol%20and%20Diesel%20in%20DevelopedCountries.pdf
*Taken from the Comparision of Total & ex-Tax Price of Petrol & Diesel with developed countries report from ministry of petroleum website. Price as of May 10, 2010. All prices are in US$ . Rs with a conversion rate of Rs 45.80 per 1 us $.
**from IMF (2009) Report as found in Wikipedia.com
