Fuel prices surge for the tenth day as rupee falls, here is the reason

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Fuel prices continued to blaze a trail for the tenth consecutive day, with petrol prices rising by more than Rs 2.50 per litre and diesel by more than Rs 3 per litre in last one month.

On Tuesday diesel prices rose by nearly 20 paise and petrol prices by 16 paise. As a result petrol is selling at Rs 79.31 per litre in Delhi and Rs 86.72 per litre in Mumbai. Diesel is selling for Rs 71.34 in Delhi and Rs 75.74 in Mumbai.

The reason for the continuous rise in the fuel price is twofold – increase in price of crude oil and the fall in the value of the rupee against the dollar.

While the rupee slumped 16 paise against the US dollar to trade at a life-time low of 71.37 in early trade on, Brent crude oil touched $78.05 per barrel on Tuesday from $77.37 per barrel on Monday.

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The only way the government can provide relief to the common man is by decreasing the taxes or the levies. One way is to cut excise on fuel and the other is to bring petrol and diesel under the GST.

Both have revenue implications for the government. A Rs 2 per litre reduction in the excise duty will mean an increase in deficit by 0.1 percent of GDP.

ALSO READ: Petrol, diesel prices rise for the ninth consecutive day

The government is considering bringing petrol and diesel under GST regime, which will ensure that the tax levied on it us uniform across the country.

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