Amid protests over Indian's steepest-ever petrol price hike last week many Indians are asking whether the government is milking the common man to keep its oil companies profitable. Each time, you fill your car with a liter of petrol in Delhi, the Center gest richer by 14.78 rupees and the state govermment earns another 12.20 rupees.
In 2010-11, the Centro and state governments netted 1028.25 billion rupees as taxes collected from the petroleum products you bought. During the year, one in every six rupees (16 percent) of the Center's tax revenues came from levies on petrol products customs duty on crude and excise on products.
Thus, while the government is bolstering its own revenues by high taxes on petroleum products, it is also using part of these revenues to prevent the firms balance sheets from slipping into red. The combined profit after tax (PAT) of the three oil firms during 2010-11 stood at 105.31 billion rupees and 130.50 billion rupees in 2009-10. According to the government, a higher fuel prices are needed to cut the ballooning subsidy bill.
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