The international price of crude oil during the last one year has hovered between a low of US $20 a barrel to a high this month of US$42 a barrel—much lower than US$107 a barrel prevailing in 2014. But the benefit of low oil prices was not passed on to Indian consumers during the last six years.

Nearly two-thirds of the retail prices of petrol and diesel go in taxes to the Centre and the states. Roughly, over 60 per cent of the taxes go to the Centre and the rest go to the states by way of VAT. In fact, the tax component on petrol is as much as 64 percent.

With dealers’ commission by and large having remained static all these years, the biggest beneficiary of the price-hike has been the central government. With GST not yielding the anticipated revenue and the lockdown having put a stop to revenue generating activity, the fund-starved central government may have found hiking petroleum prices an easier option to garner some revenue.

But Kerala’s finance minister Thomas Isaac, however, struck a hornet’s nest by not only condemning what he described as a “loot under the cover of pandemic” but going on to suggest a motive behind the unchecked price-rise.

“What is the motive behind oil companies being allowed to raise the price for 17th consecutive day totalling increase of Rs 9.5 for diesel and Rs 8.5 for petrol? They are preparing for privatisation of oil companies. Sheep have to be fattened before slaughter,” he tweeted. BJP’s stock response has been to ask opposition-ruled states to reduce VAT to give relief to the people. But while the daily price increases have followed the upward movement in the international crude prices in June, it is also a fact that there has been a steep hike in central duty since 2014. The states have benefitted from the resultant hike in prices but few states have uniltaterally increased rates of VAT on petroleum.