The centre is in favour of a continued graded increase in the retail price of petrol and diesel to accommodate the past surge in crude oil prices.
Government sources have told Business Today TV that retail prices could gradually increase by up to Rs 12-14 per litre, without any duty cuts by the centre or states.
On Tuesday, petrol and diesel prices were hiked once again – the seventh time in eight days – across India. In all, petrol and diesel prices have gone up by Rs 4.80 per litre - the steepest increase in any eight days since the daily price revision was implemented in June 2017.
A litre of petrol now retails for above Rs 100 in all metros and state capitals, with Mumbai seeing a price of Rs 115.04 a litre, while in Chennai, it is priced at Rs 105.94 and in Kolkata at Rs 109.68. Diesel is priced at Rs 99.25 a litre in Mumbai, Rs 96 in Chennai and Rs 94.62 in Kolkata.
Prices of Brent crude have softened to $112 per barrel from a high of $ 130 per barrel in the aftermath of the Russian invasion of Ukraine. Speculators have been forced to pare their bets after a sudden fall in demand from China, the world’s top oil consumer. Several industrial hubs in the Chinese mainland including Shanghai and Shenzhen have been put under lockdown to curb the re-emergence of Covid. A recent report by Kotak Institutional Equities said that oil marketing companies “will need to raise diesel prices by Rs 13.1-24.9 per litre and Rs 10.6-22.3 a litre on petrol at an underlying crude price of $100-120 per barrel”.
On its part, CRISIL Research had said that a Rs 9-12 per litre increase in retail price was required for a full pass-through of an average $100 per barrel crude oil and Rs 15-20 a litre hike if the average crude oil price rises to $ 110-120.
Petrol price in the national capital had last crossed Rs 100 a litre mark on July 7, 2021, and went on to touch an all-time high of Rs 110.04 before the Modi government on November 4 reduced excise duty on auto fuels. Most states matched that cut with a reduction in local sales tax or VAT. Post that daily rate revisions were put on hold as elections in five states, including Uttar Pradesh, approached. Meanwhile, crude oil prices rose from $82 per barrel to nearly $140 before falling.
Moody's Investors Services last week stated that state retailers together lost around $ 2.25 billion (around Rs 19,000 crore) in revenue for keeping petrol and diesel prices on hold during the election period.
India is 85 per cent dependent on imports for meeting its oil needs and so retail rates adjust accordingly to the global movement.
(With agency inputs)
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