Projecting a moderation in inflation despite the hike in petrol and diesel prices, the Economic Survey on Thursday cautioned against the pressures from rising foreign funds and global commodity price movement.
Petrol and diesel prices may be hiked by up to Re 1 per litre each on August 15, the next due date for fuel price revision, in step with the surge in global oil prices.
The drop in international oil prices has resulted in revenue loss of Indian Oil, Bharat Petroleum and Hindustan Petroleum dip to Rs 400 crore per day from Rs 450 crore (Rs 4.5 billion) a fortnight back. The basket of crude oil India buys averaged $111.09 a barrel in the second fortnight of August as compared with $117.37 per barrel in the first fortnight of the month.
promises a mileage of 24.2 kmpl.
The EGoM was originally scheduled to meet on Wednesday but has been deferred because of non-availability of certain ministers in the grouping.
Diesel prices have cumulatively risen by Rs 10.68 a litre in 17 instalments since January 2013 when the United Progressive Alliance government had decided on the monthly hikes.
The rising rupee over the last three months has brought cheer to the oil marketing companies, who have together added around Rs 250-300 crore (Rs 2.5-3 billion) to their operating profits already.
Petrol price cut by Rs 1.15 per litre while diesel rate hiked by Rs 0.50 a litre with effect from midnight on Thursday.
Dealers say there's been a 20-25 per cent drop in demand.
A hike in the prices of petrol and diesel is unlikely before June 15 as the Congress-led government does not want a showdown with its allies in the first session of Parliament beginning June 2.
Petrol and diesel prices will go by Rs 2.50 and Rs 2 per litre respectively.
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There is no payment problem for Russian crude, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Wednesday. He said there is no proposal to cut retail fuel prices at the moment. Addressing a press conference, the minister said India enjoys a buyers' position and foreign suppliers are approaching Indian companies with offers to sell oil.
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Financial services majors Citi and HSBC said the long awaited government decision to hike fuel prices is a positive step, although it will fan the already high inflation and may not prevent fiscal slippage.
The WPI inflation currently is ruling around 8.6 per cent. He said the duties like 5 per cent import duty on crude oil was abolished when international crude price touched a record high of $147 a barrel.
Cooking gas LPG price was on Thursday hiked by Rs 3.50 per cylinder, the second increase in rate this month following the firming of international energy rates. Non-subsidised LPG now costs Rs 1,003 per 14.2-kg cylinder in the national capital, up from Rs 999.50 previously, according to a price notification of state-owned fuel retailers. This is the second increase in LPG rate this month and the third in less than two months. The price was hiked by Rs 50 per cylinder on March 22 and again by the same quantum on May 7.
The ongoing Hamas-Israel conflict has disrupted India's efforts to gain from a recent fall in crude oil prices. Since Hamas' invasion of southern Israel on October 7, petroleum has become costlier by around $5 per barrel, threatening to stoke prices and impact growth. Brent crude was trading at $89.8 per barrel on October 9 (9.15 pm IST), up over 4 per cent, thwarting India's anticipation of a period of declining oil prices - after the leading global petroleum benchmark declined by around 11 per cent last week.
The government will look into the issue of revising the petrol and diesel prices in view of the steep increase in international crude oil prices, the new Minister for Petroleum and Natural Gas Mani Shankar Aiyar said on Monday.
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'While intensification of fuel prices and broad-based domestic cost pass-through pressures is a downside risk, core inflation is expected to strengthen further as demand recovers to pre-Covid levels,' the ministry said on Friday.
In a statement issued in Mumbai, Athawale, a Bharatiya Janata Party ally and the Union Minister of State for Social Justice, said that he understands people are getting affected by the rising fuel prices.
Hours after the United Progressive Alliance government increased petrol and diesel prices today, the Left parties announced nationwide demonstrations against the hike, which are likely to be held on June 28.
Petroleum Minister Ram Naik on Wednesday hoped the high international crude oil prices will ease as soon as the winter season demand for oil in western countries is over.
Gandhi said the one paisa cut in petrol rates was not a "suitable response" to the fuel challenge he threw to the prime minister a few days ago.
Kejriwal charged that the BJP toppled Manipur, Bihar, Assam, Madhya Pradesh and Maharashtra governments.
With Indian Oil, Hindustan Petroleum and Bharat Petroleum projected to lose Rs 200,000 crore (Rs 2,000 billion) in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs 2 to 5 per litre appears on the cards.
These refineries, commissioned mostly in the 1950s and 1960s during India's early industrialisation push, are inefficient and costly to maintain compared to their modern counterparts on the coast mainly operated by private companies.
Oil firms were supposed to break-even on sale of petrol, diesel, LPG and kerosene if the price of the basket of crude India buys were to come down to $67 per barrel. However, with 20 per cent depreciation in value of rupee against the dollar, the break-even point is now at $61 a barrel.
