Since end-May there has been volatility in the foreign exchange market.
The excise duty cut will translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 a litre in diesel after taking into account its impact on other levies.
Narendra Modi's landslide victory gives him the mandate to deregulate diesel prices as well as raise natural gas rates with a clear road map towards free pricing to cut subsidies and shrink the budget deficit.
Diesel price needs to be revised upward, or subjected to higher taxes, as misuse of subsidized diesel was adding to pollution and public health costs, the government's pre-budget economic report card said on Thursday.
Faced with huge under-recoveries, Indian Oil Corporation on Saturday sought an immediate upward revision of petrol and diesel prices to the the extent of Rs 10.50 paise per litre.
A surge in international oil prices may translate into an increase in the retail selling price of petrol and diesel in India as oil companies face extreme margin squeeze, sources said. Petrol and diesel prices have remained unchanged for 12 days but now the international rate surge is exerting pressure. Current prices of petrol and diesel in the international market are higher by around $4-6 per barrel as compared to average prices during August. However, no increase in retail prices has been affected by oil companies so far, sources said.
The proposed move would lead to dismantling of the administered price mechanism.
"There is no immediate plan to decontrol diesel or LPG as they have cascading effect (on general prices)," Minister of State for Petroleum and Natural Gas R P N Singh told reporters in New Delhi.
Diesel rates had gone up by Rs 12.55 a litre between June 7, when oil firms resumed revising prices in line with cost, and July 25.
Petrol would cost Rs 33.49 per litre in Delhi while diesel Rs 22.12 per litre.
Holding her party would oppose any 'attempt to sell out the country', she claimed that in the past five months, the Centre had done nothing 'good' and that 'Bharatiya Janata Party is only busy beating its own drum in the social media'.
The Bharatiya Janata Party on Thursday described Samajwadi Party's opposition to the hike in diesel price as a "drama" and demanded that the government reduce value added tax (VAT) in Uttar Pradesh if it was really concerned about the people.
"The recent increase in diesel prices is an important step in the right direction," he said while addressing the meeting of the Full Planning Commission which was called to approve the 12th Five Year Plan document.
While GST on ICE vehicles was brought down significantly, for electric cars it remained at 5 per cent.
"I am not of the view that diesel price deregulation is inevitable and that is the position taken by petroleum ministry right now. Given the inflationary situation right now, we don't want to do that...," chief economic adviser Kaushik Basu told reporters on the sidelines of a CII event here.
Petrol and diesel prices, which have been on a freeze for the past four months in view of assembly elections in states like Uttar Pradesh, need to be increased by over Rs 12 per litre by March 16 for fuel retailers to break even. International crude oil prices shot above $120 a barrel for the first time in nine years on Thursday before retreating a little to $111 on Friday, but the gulf between cost and retail rates has only widened. With international oil prices - on which domestic fuel retails are directly benchmarked - spiking in the last two months, state-owned fuel retailers "need a massive price hike of Rs 12.1 per litre on or before March 16, 2022, just to breakeven and a price hike of Rs 15.1 is required" after including margins for oil firms, ICICI Securities said in a report.
State-owned fuel retailers, who control 95 per cent of the petrol pump sales, sell diesel at government-fixed rates, which are way lower than the cost of production.
The cumulative increase since the oil companies started the cycle on June 7 now totals to Rs 9.17 for petrol and Rs 11.14 for diesel.
Petrol, diesel prices hiked by 40 paise
The fiscal tilt towards capex benefits companies in investment-related sectors like capital goods, defence equipment, engineering & construction and metal & mining. The planned cut in revenue expenditure will weigh on companies in consumption sectors like FMCG, consumer durables and retail.
The government has no immediate plans to raise petrol and diesel prices even though raw material costs have surged to their highest level this year, Petroleum Secretary R S Pandey said on Thursday.
Reliance industries on Monday increased diesel prices by Rs 2 per litre.
In 13 hikes, petrol price has gone up by Rs 7.11 per litre and diesel by Rs 7.67 a litre.
The three companies in separate presentations to the Kirit Parikh Committee on fuel pricing suggested immediate freeing of petrol and diesel prices from government control.
Diesel is currently sold at a loss of over Rs 10.80 per litre.
The price of diesel in Delhi will be hiked by 57 paise.
State-run oil firms have sought a Rs 1.50 a litre increase in diesel prices to cover for the rising crude prices, but the government is unlikely to concede to their demand.
The government has allowed oil companies to raise diesel price by 50 paise a litre per month; bulk users to be charged market price.
Petrol and diesel prices were on Tuesday hiked by 80 paise a litre while domestic cooking gas prices were increased by Rs 50 per cylinder, ending an over four-and-half month election-related hiatus in rate revision, sources said. Petrol in Delhi will now cost Rs 96.21 per litre as against Rs 95.41 previously while diesel has gone up from Rs 86.67 per litre to Rs 87.47. Simultaneously, the price of a non-subsidised LPG cylinder has been increased to Rs 949.50 for each 14.2-kg bottle in the national capital.
The price of diesel sold to bulk users has been hiked by about Rs 25 per litre in line with a near 40 per cent rise in international oil prices, but retail rates at petrol pumps remain unchanged, sources said. Petrol pump sales have jumped by a fifth this month after bulk users like bus fleet operators and malls queued up at petrol bunks to buy fuel rather than the usual practice of ordering directly from oil companies, widening the losses of retailers. Worst hit are private retailers like Nayara Energy, Jio-bp and Shell, who have so far refused to curtail any volume despite a surge in sales.
The monthly hike in price came after several rounds discussions that the new Oil Minister Dharmendra Pradhan held with state-owned oil firms on continuing with the reform initiated by the United Progressive Alliance government.
India has asked bulk buyers to pay market rates for diesel since last January and has also been raising the price of subsidised diesel in small amounts every month in an effort to cut its ballooning fuel subsidies.
Petrol and diesel prices were on Wednesday hiked in seven states like West Bengal and Maharastra and that of domestic LPG in six states as state-owned oil firms recalibrated rates to reflect changes in local levies.
Raise the price of diesel and restrict supply of subsidised LPG cylinder in a year to four per family, Prime Minister's Economic Advisory Panel suggested on Friday.
As the world's third-largest oil importer and consumer, India is running out of options as the relentless surge in international oil prices make it imperative to pass them on to consumers, officials said on Monday. India imports 85 per cent of its crude oil needs and about half of its natural gas requirement. While the imported crude oil is turned into fuels such as petrol and diesel, gas is used as CNG in automobiles and fuel in factories.
One litre of petrol now costs Rs 64.76 while the diesel price is Rs 54.70 a litre in Delhi
Electric vehicle (EV) penetration in the luxury car segment has seen a drop by nearly 3 percentage points in the GST 2.0 era with the internal combustion engine versions offering better total cost of ownership, according to industry players. While the trend is also visible in the mass market segment, it is the entry luxury segment that is witnessing a more marked shift towards internal combustion engine (ICE) vehicles as price difference between EV and ICE widened under the new GST rates.
Moody's statement comes on a day when opposition parties are observing nation-wide strike to protest against the price hike and government's move to operationalise its decision on allowing foreign direct investment in multi-brand retail.
With vast disparity in fuel prices, the demand for diesel cars had reached upto 85 per cent and petrol cars had come down to 15 per cent, which otherwise usually remained at 50:50 per cent levels in India.
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