The government will cut petrol and diesel prices when there is a sustained drop in global crude oil prices, Petroleum Minister Murli Deora said on Thursday.
As crude oil prices hover around four-year lows, the government may look at slashing diesel prices further that will help cool inflation by lowering goods transportation charges.
Reserve Bank Governor Shaktikanta Das on Wednesday ruled out upside risks to the 5.3 per cent inflation forecast for the current fiscal, saying the recent cut in excise duty on diesel and petrol as well as better management of supply-side issues on the food front have contained inflationary expectations. These measures are significantly positive for inflation management, he said. After months of calls for reducing taxes on fuels, the government, last week, cut the excise duty on diesel and petrol by Rs 10 and Rs 5 per litre, respectively.
The loss, which is made good through government subsidy, has declined since March as the rupee strengthened against the dollar and global oil prices softened.
The price differential between diesel and petrol has narrowed. But there are still enough reasons to opt for the diesel variant.
Jet fuel prices on Thursday were hiked by the steepest ever 16 per cent to catapult rates to an all-time high in step with hardening international oil rates.
Petrol price has been cut by 58 paise a litre and diesel by 25 paise with effect from midnight tonight.
Petroleum Minister Murli Deora on Tuesday said petrol and diesel prices will not be increased "as of now" even as he began consultations with Finance Minister P Chidambaram on ways of mitigating the spurt in global oil prices.
State-owned oil companies on Wednesday raised the prices of petrol and diesel by Re 1 per litre each, effective from midnight.\n\n\n\n
Prime Minister Manmohan Singh on Tuesday said that diesel prices too will be freed from government control as part of 'much-needed reforms', but LPG and kerosene will continue to be subsidised.
Technical Advisory Committee was for status quo in policy rate on little hope of government action.
Excise duty on petrol will remain at Rs 14.35 a litre and diesel at Rs 4.60 per litre.
Their first target would be bulk buyers.
Petroleum Minister Mani Shankar Aiyar on Tuesday hinted that the system of fortnightly revision of petrol and diesel prices is likely to be replaced with monthly or quarterly revisions.
Diesel prices are raised every month by up to 50 paise per litre to trim the losses. Rates were last raised on August 1 after which losses had dipped to Rs 1.33.
Petroleum Minister Murli Deora on Friday said the government would wait for international crude prices to stabilise before announcing any cuts in domestic petrol and diesel prices.
The share of diesel vehicles sold in 2014-15 was 37 per cent.
Prices of petrol were reduced 32 times and increased 21 times while diesel prices were slashed 19 times and raised 28 times since 2013.
The government had in April 2002 freed petrol and diesel prices from administrative control, following which the state retailers revised prices every fortnight in line with changes in costs. But, controls were brought back in 2004 when crude oil rose to $37 a barrel and they have stayed high since then with crude oil soaring to an all-time high of $147 a barrel in July 2008.
Minister of State for Food and Public Distribution Kantilal Bhuria told the Lok Sabha in a written reply that there was no immediate impact of the hike in petrol and diesel prices on essential commodities. Impact of some of the factors, including hike in prices of petrol and diesel could be felt only with a time-lag. While price of rice went up, prices of wheat, atta, chana dal, tur dal, sugar, mustard oil, vanaspati, milk & onion did not rise during the period under review.
Petrol price will go up Rs 3.73 a litre if the domestic prices are aligned with international rates.
The Kelkar Committee has recommended sharp reduction in subsidies on petroleum, food and fertiliser, which the government said was contrary to its policy of protecting the poor.
Deregulating petrol and diesel prices has been on the cards since the crude oil prices came down by $100 from the historic high of $147 a barrel, a few weeks back. But with the rates climbing again, doubts are being cast if prices can actually be freed. Crude oil prices are ruling at $71-72 a barrel, a seven-month high.
The railways buy an average of 2.4 billion litres of diesel every year spending around Rs 4,500 crore (Rs 45 billion) annually on diesel fuel expenses for operating locomotives.
The Maharashtra government has reduced sales tax on diesel from 34 per cent to 25 per cent.
The government is preparing to bite the bullet, with partial decontrol of diesel prices after the Presidential election on July 19.
Petrol price on Tuesday breached the Rs 85 a litre mark in the national capital and diesel neared record high after rates were raised for the second consecutive day. Petrol and diesel prices were hiked by 25 paise per litre each, according to a price notification from oil marketing companies. This took the petrol price in Delhi to Rs 85.20 per litre and to Rs 91.80 in Mumbai. Diesel rate climbed to Rs 75.38 a litre in the national capital - just shying away from its record high - and to an all-time high of Rs 82.13 in Mumbai, the price data showed.
Jet fuel prices on Wednesday were cut by 1.3 per cent -- the first reduction after 10 rounds of price hikes -- on softening international crude oil rates. Simultaneously, prices of commercial LPG - used by business establishments such as hotels and restaurants - were reduced by Rs 135 per 19-kg cylinder. The price of aviation turbine fuel (ATF) -- the fuel that helps aeroplanes fly -- has been reduced by Rs 1,563.97 per kilolitre, or 1.27 per cent, to Rs 1,21,475.74 per kl (Rs 121 per litre) in the national capital, according to a price notification of state-owned fuel retailers.
What's driving consumers to petrol cars? Ajay Modi finds out.
The government's decision to hike diesel price by Rs 5 has shocked the nation.
Petrol is currently sold at a loss of Rs 6.68 per litre and diesel at Rs 5.81 per litre. Naik said the Vajpayee government had given Navratna oil firms the freedom to decide fuel prices.
Given India's low average salaries and large number of jobs in the informal sector, even a small spike in inflation can put poor consumers at risk.
With the latest diesel price rise, coming after a rollback of most of the earlier proposals for a passenger fare increase, Indian Railways' operational surplus is expected to come down by 24 per cent, to Rs 11,707 crore (Rs 117.07 billion) in 2012-13 as against the Rs 15,557 crore (Rs 155.57 billion) anticipated at the beginning of the financial year.
The AIMTC, which had gone on strikes to protest diesel price hikes in the past, said it will hold a meeting of its national members on July 12 to chalk out its future course of action.
The government freed diesel pricing last October, providing a level playing field to private companies like Reliance and Essar Oil.
In Delhi, petrol price down Rs 2.5 a litre, diesel by Rs 2.25
The Petroleum Federation of India, the apex body of public and private oil firms, has submitted to the oil ministry a 100-day agenda for the new government. On top of its list is decontrol of petrol and diesel prices. Currently, public sector retailers sell auto fuel at government-dictated rates, which the private sector competition is unable to match in times of high input cost (crude oil prices).
A graphic showing how the average prices for petrol and diesel have moved over the last ten years.
After a spike, losses on sale of diesel have fallen by nearly a rupee to Rs 2.49 per litre as international oil rates have moderated.
Petroleum Minister Ram Naik on Tuesday ruled out any increase in petrol and diesel prices in the run-up to the General Elections saying international crude oil prices have eased.
