In India, the price of petrol can vary depending on the city you are in. But one thing remains consistent: petrol in India is generally more expensive compared to many other countries. But why? The answer is a combination of global factors and domestic policies.
- Global Oil Market: The international price of crude oil is a major player. As the raw ingredient for petrol, the price of crude oil fluctuates based on global supply and demand, geopolitical tensions, and production decisions by oil-producing countries. If the price of crude oil increases globally, the cost of petrol also goes up.
- Taxes: Another significant factor is domestic taxes levied by the central and state governments. These taxes can change depending on government policies, adding an extra cost to the base price of petrol.
- Exchange Rates: Since India imports a large portion of its crude oil, the exchange rate between the Indian Rupee and the US Dollar also matters. If the Rupee weakens against the Dollar, it becomes more expensive to buy oil, leading to higher petrol prices at the pump.
So, while global oil prices are a major influence, India's heavy tax burden is the primary reason why petrol can be more expensive here than in some neighbouring countries.