UPDATED: May 4, 2021 18:07 IST
Petrol and diesel rates have been hiked on Tuesday for the first time in nearly two months, even as international crude oil prices continue to dip amid falling demand in Covid-hit countries like India.
The fresh fuel price hike comes after the results for the high-pitched assembly elections in four states and one union territory were announced on Sunday.
Today’s development also signals the beginning of a fresh round of fuel price hike, as state-run oil marketing companies (OMCs) aim to recover losses incurred by keeping rates artificially lower for almost two months due to assembly elections.
Going forward, petrol and diesel rates are likely to be gradually raised by OMCs.
On Tuesday, petrol price was hiked by in all metro cities by 12-15 paise per litre. In Delhi, a litre of petrol costs Rs 90.55 after the price was hiked by 15 paise. Mumbaikars now have to pay Rs 96.95 for a litre of petrol after a hike of 12 paise.
The price in Kolkata has been hiked to Rs 90.76 from Rs 90.62, while in Chennai the price has been hiked by 12 paise to Rs 93.67. In Bengaluru, the petrol price has been hiked by 24 paise to Rs 93.67 per litre.
While petrol rates in several cities have been hiked, some like Gurugram, Bhubaneshwar and Jaipur have seen a reduction in rates.
Meanwhile, diesel rates have also been hiked in major cities by 15-18 paise per litre. In the national capital, the price of diesel has increased by 18 paise to Rs 80.91 per litre, while in Mumbai it has gone up by 17 paise to Rs 87.98 per litre.
The price in Chennai has been hiked by 15 paise to Rs 85.90 per litre, and by 17 paise in Kolkata to Rs 83.78 per litre.
DECODING FRESH HIKE
The fresh hike comes at a time when global crude oil prices are falling once due to a widening demand crisis due to rising Covid-19 cases in countries like India, which is the third-biggest oil importer in the world.
India’s oil imports had declined significantly in the wake of the pandemic in 2020 and a repeat seems to be on cards as the country is again grappling with a deadlier second wave.
Global crude oil prices are likely to weaken further if the Covid situation in India does not improve soon. The growing calls for a complete lockdown in the country may further weaken global sentiments.
While this gives more scope to state-run OMCs to decrease high petrol and diesel rates in the country, they are unlikely to take such a step due to the losses they have incurred over the past two months.
State-run OMCs are expected to increase fuel rates even as international crude oil prices fall as they look to recover losses they suffered by keeping prices low for almost two months.
The gradual hike in fuel prices by OMCs is likely to hurt Indian citizens and businesses as petrol and diesel rates are already high in the country.
However, the reason why India’s fuel prices are higher than most other neighbouring countries is due to a high rate of taxes levied by the Centre and state governments.
It may be noted that India levies one of the highest taxes on fuel in the world.
While there have been repeated appeals by citizens to lower taxes on fuel, the government is unlikely to take such a step soon as it has proved to be a good source of revenue during the Covid-19 crisis.