Making a case for increasing prices of petroleum products and deregulating diesel prices, the Reserve Bank on Monday said these steps are necessary to contain fiscal slippages and arrest decline in growth.
The petroleum ministry has proposed a Rs 3.25 per litre hike in petrol and about Rs 4 per litre increase in diesel prices in line with the spurt in global crude oil prices that have touched $66 a barrel.
Oil marketing cos rightly passed on the burden to buyers.
BJP-ruled Maharashtra levies 46.52 per cent VAT (47.64 per cent in Mumbai) on petrol, the highest in the country.
The cabinet committee on economic affairs will meet this evening to decide on the prices of petrol, diesel, LPG and kerosene, petroleum minister Mani Shankar Aiyar said.
Government earlier this month cut petrol price by Rs 5 a litre and diesel by Rs 2 per litre as crude oil prices dipped from an all-time high of $147 a barrel in July to under $45 a barrel. Even after the price cut, public sector oil firms were making a profit of Rs 9.98 on sale of every litre of petrol and Rs 1.03 per litre on diesel.
The surprise decision of OPEC and its allies, including Russia, to cut oil output may cause an immediate rise in prices, delaying revision in fuel prices in India, industry sources said. The grouping of Organisation of Petroleum Exporting Countries (OPEC) and its allies, called OPEC+, on Sunday decided to further cut oil output by around 1.16 million barrels. The move led to Brent rising by almost 6 per cent to $84.58 per barrel on Monday.
For the first time in the history of India, state-run oil firms on Saturday passed on the benefit of appreciating rupee value to consumers by way of a 10 paise per litre cut in petrol and diesel prices.
The government is unlikely to hike prices of petrol and diesel at the next revision due on August 31 despite the surge in crude oil prices.
Former Petroleum Minister and senior Bharatiya Janata Party leader Ram Naik on Wednesday flayed the Congress-led government for raising the LPG prices, saying the burden on the common man could have been avoided by cutting duties.
Planning Commission Deputy Chairman Montek Singh Ahluwalia on Saturday strongly supported the view that petroleum prices in the country should "align with the global price."
The Bharatiya Janata Party on Tuesday announced country wide protest programme for two days beginning Wednesday against the hike in the prices of petroleum products.
The proposed move would lead to dismantling of the administered price mechanism.
The government on Monday said it would not free diesel prices from its control in hurry as the move would lead to sharp rise in price of fuel most used in the transport sector.
Left parties on Monday opposed any increase in petrol and diesel prices in step with the hike in global oil prices and higher taxes, and asked the government to restructure duties to protect the consumers.
Concerned over crude oil prices touching a record $64 a barrel in the international market, Petroleum Minister Mani Shankar Aiyar on Tuesday said the Cabinet will decide on raising domestic fuel prices in line with the spurt.
The government on Thursday decided not to increase petrol and diesel prices, and issue oil bonds worth Rs 23,457 crore (Rs 234.57 billion) to partly compensate public sector oil companies for the losses incurred on fuel sales."We have kept our promise of not raising prices of sensitive petroleum products," Petroleum Minister Murli Deora told PTI after a meeting of the Cabinet.
A higher government borrowing will 'crowd-out' the private borrowing and push interest rates higher.
Prices of petrol and diesel will not be reduced immediately as oil companies continue to make losses even after the recent fall in international oil prices, Petroleum Minister Murli Deora said on Wednesday.
The rise in petro-product prices have been necessitated by rising global costs of petroleum and the fact that the price of petrol and diesel has not been increased in India since January 2004.
The government is exploring various options, including a marginal hike in prices of petrol and diesel, and a possible duty cut to ease burden on state-run oil firms that are increasingly losing revenue due to global crude prices surging close to $100 a barrel. "We will do all that is possible to protect the interests of our PSUs," Petroleum Minister Murli Deora said after a brief meeting with Prime Minister Manmohan Singh on the issue on Friday.
Perhaps for the first time, petrol in India costs more than the superior jet fuel (ATF) used in aeroplanes, as the government has levied a record excise duty on the fuel used in two-wheelers and cars.
Home-grown automobile major Mahindra & Mahindra, whose sales are predominantly driven by diesel-powered utility vehicles, has said an increase of Rs 5 a litre in the price of the fuel or a differential of up to 20 per cent with petrol price will not impact vehicle sales.
Samajwadi Party chief Akhilesh Yadav on Monday criticized the Uttar Pradesh government over the severe traffic congestion in Prayagraj, claiming it has led to a shortage of essential commodities and inconvenienced devotees visiting the Maha Kumbh Mela. He also posted a video on X with people sharing their experiences and pointing out at the chaos. Yadav alleged that the officials are giving orders sitting in their rooms but are not coming down to the ground and that residents of Prayagraj have got nothing except filth, traffic jams and price rise.
Parliament failed to transact any business on Monday as the Opposition members created uproar over hike in fuel prices and demanded immediate rollback.
The government on Friday slapped an export tax on petrol, diesel and jet fuel (ATF) while also joining nations like the UK in imposing a windfall tax on crude oil produced locally. A Rs 6 per litre tax on export of petrol and ATF and Rs 13 per litre tax on export of diesel is effective from July 1, finance ministry notifications showed. Additionally, a Rs 23,250 per tonne tax was levied on crude oil produced domestically.
However, copious oil supplies amid growing global output and slowing Chinese oil consumption will put India in a better bargaining position with Gulf suppliers.
Petrol, diesel prices hiked by Re 1/ litre
No change in retail prices as oil marketing firms to absorb increase
The average price of Indian basket of crude oil during 2007-08 (upto August) has increased to $68.34 per barrel as compared to 62.46 dollars a barrel during 2006-07.
Congress president Mallikarjun Kharge has accused the BJP of rigging the Maharashtra assembly elections and called for a return to ballot paper voting. He also criticized the Modi government for selling off public assets, undermining democratic institutions, and promoting communal polarization. Kharge's remarks come as the Congress prepares for its AICC session in Ahmedabad, where it will present its political and economic views.
'Primary buyers are commercial taxi and fleet operators and small businessmen.' 'CNG prices have been remarkably stable unlike petrol.'
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.
Key United Progressive Alliance allies Trinamool Congress and Dravida Munnetra Kazhagam on Saturday mounted pressure on the Centre to rollback the steep hike in petrol price with Trinamool Congress supremo Mamata Banerjee leading a street march in Kolkata against the government of which her party is a part.
The government on June 25 deregulated petrol price and said the same for diesel will be done soon. But with inflation rate continuing to remain at unmanageable levels, the government put-off the decision as any further hike in diesel price would lead to cascading effect.
Petrol prices may be cut by as much as Rs 1-1.50 per litre next week on falling international oil rates and appreciating rupee but a one-time hike in diesel and possibly LPG rates is still on the cards.
A source said on Tuesday that 'petroleum ministry is likely to propose deregulation of petrol prices and gradual phasing out of subsidies on diesel to ease burden on public sector oil marketing companies' -- indicating a possible hike of Rs 3 per litre in petrol rates.
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