petrol price: Where India is feeling the most pinch this festive season

petrol price: Where India is feeling the most pinch this festive season


Relentlessly rising prices of fuel are threatening to complicate India’s comeback story at a time when everyone — the policymaker, the economist, the common man — was hoping a rapidly reopening economy would put the country’s year-and-a-half-long pandemic travails firmly in the past.

While having to pay through the nose at petrol pumps has been the dominant talking point for a while, it is hardly the only item running India ragged this festive season. In fact, take the case of any other fuel, and the story is hardly any different.

Here follows a ready reckoner on things that are pinching India the most this festive season.

Petrol & Diesel
First, the issue that now dominates every discussion — in policy parlours, at dinner tables, on the street.

After seven consecutive hikes, petrol prices went beyond Rs 110/litre in Delhi on November 2. Diesel, now at well over Rs 98 after the latest’s hike, has also reached within striking distance of the psychological mark of Rs 100 a litre.

In Mumbai, petrol prices had overshot that mark quite a while ago. The rate for today there is over Rs 115.

To be sure, crude prices are now higher by $9-10 a barrel compared to August. That is still poor justification for consumers in a country where taxes account for almost half the price of fuel.

Taxes currently make up more than 53% of petrol prices and over 47% of that of diesel (Delhi market). And the govt’s current stance, based on indications from FinMin, is that taxes won’t be lowered irrespective of where crude prices reach.

Given the oil-producing countries’ current playbook on production schedules & quantum, crude prices are unlikely to come down anytime soon. Worse, they can only go up, experts say.

So, in view of both govt’s & OPEC’s stances, will it mean an even bigger hole in the consumer’s pocket in the week(s) ahead? Looks likely.

Bringing petrol & diesel under GST seems to be the only way the Indian consumer can get some sort of relief from the fuel scourge. But with both the Central and state govts openly reluctant to let go of this easy-gotten bounty, when India is likely to get such relief is anyone’s guess.

LPG

On November 1, the price of commercial LPG cylinders was hiked by Rs 266.

After the increase, 19-kg commercial cylinders now cost Rs 2,000.50 in Delhi, compared to Rs 1,734 earlier.

The price of of domestic LPG cylinders, however, was not hiked yesterday. The last time cooking gas prices were hiked was on October 6, when they rose by Rs 15 per cylinder to a new record high.

Domestic cooking gas, also called liquefied petroleum gas (LPG), now costs Rs 899.5 per cylinder in Delhi. Its prices have gone up by Rs 305 a cylinder, or 50%, in just one year.

There could be more bad news in store for the consumer. Various reports say the govt is making plans to raise LPG cylinder prices to more than Rs 1,000. Which means, you might again end up having to revise your monthly budget upwards.

ATF

On November 1, oil companies hiked jet fuel prices by 13.9%. After the latest hike, the rate of ATF (air turbine fuel) is now Rs 82,638 per kilolitre (Delhi).

This is an astounding increase of 95.8% over November 2020 prices. Fuel now accounts for up to 40% of the total cost of flight operations. This is one of the highest rates in the world.

The sharp hike is set to hit the aviation sector hard at a time when things were just beginning to be back to normal after months of unprecedented hurt.

It could be very bad news for flyers too, because prices going up further seems to be a most normal thing at this point.

Some industry people, however, say it might be tough for airlines to pass on the hike to flyers in the face of intense competition. In which case, it will be very bad news for airlines.



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