For the first time since November 4, 2021, the Indian government has hiked up the price of fuel. A hike of 80 paise per liter was introduced for petrol and diesel while the rate of cooking gas shot by a massive 50 rupees per liter.
The fuel price fiasco first commenced on November 2nd 2021. Two days later, Rs 5 per liter cut in excise duty on petrol and Rs 10 per liter cut in excise duty on diesel was announced to give Indians some breathing space in a world where the price of crude oil was constantly rising. Aviation fuel has also gone percent since January.
The hike was expected to be phased in post elections, however, in the light of the second half of the Budget Session, the measure may have been delayed. The latest price hike implies consumers will have to pay more for fuel, but still, the increase is less than 1 percent of the per liter price that is prevalent right now.
Since Russia’s invasion of Ukraine, oil prices around the world have heavily spiked even touching $140 per barrel. This is natural as Russia is one of the world’s largest producers and exporters of crude oil. India is the third largest consumer of oil worldwide, and over 85 percent of the demand is satisfied through imports.
Even with the substantial increase in oil prices around the world, Indians are currently paying only 1% more than they were prior to the Russia-Ukraine crisis.
Meanwhile, diesel prices for bulk consumers have been increased by Rs 25 per liter after a 40% increase in worldwide oil prices due to the current Russia-Ukraine conflict. According to a PTI report, petrol pump sales increased by 20% this past month after bulk users such as bus and truck operators, and malls queued up at petrol bunks to buy fuel rather than the typical practice of ordering directly from oil firms, to prevent retailers’ losses.
While experts have predicted a further increase in the price of oil not only India, but worldwide, they hope that the government will step in with a tax cut like they did in four months prior in November. The duty and taxes account for 40-50 percent of the price, and are a major source of revenue for the Centre and state governments. This will reduce the government’s inflow of money but it would be crucial to help petrol, diesel and gas retailers to stay afloat.
