In just 12 straight days, Indias state-owned oil marketing companies have raised the retail prices of petrol and diesel by 6.55 and 7.04 a litre, respectively. A consumer in Delhi would have ended up spending about 9% more on petrol at an Indian Oil Corporation fuel pump on Thursday while those driving diesel vehicles would have found their fuel costs had risen by a little more than 10%. Over the same period, the price of Brent crude oil futures, which contributes a fourth to the value of the Indian crude basket, declined by about 3%. If one drills down to the price buildup data shared by IOC, petrols freight inclusive base price as on June 16 in Delhi was 22.44, a significant 23% higher than the 18.28 before the refiners embarked on their latest round of price increases. It is disconcerting that between the OMCs, which had frozen their daily resetting of prices for almost 12 weeks following a reduction on March 16, and the Central and State governments, automobile fuels have been targeted for milking revenue. The buildup data shows that Excise Duty, levied by the Centre, and VAT collected by the Delhi government together constituted two-thirds the 76.73 pump price of petrol as on June 16.
On the face of it, the OMCs decision to resume daily price resetting would appear to be in broad conformity with the pricing deregulation that the Centre has intermittently committed to ever since the government of the day freed up petrol prices in 2010. However, the timing of the recent moves to raise levies and retail prices by the governments and fuel marketers, respectively, is at odds with logic at a point when the country is grappling with the impact of a pandemic. The aim of maximising takings from fuel products to offset shortfalls in other revenue streams can only bear fruit if petrol and diesel offtake remains unaffected and the rising fuel bill doesnt end up depleting household consumption budgets. With public transportation yet to restart fully in most urban areas and operating with tight restrictions and at lower frequencies even where some services have resumed, most commuters continue to have little choice but to use personal vehicles. Also, with the lockdowns imposed to contain the spread of COVID-19 having severely hit business activity at all levels, the onus is on the governments both at the Centre and in the States to facilitate the resumption of economic activity in every manner possible. Given that diesel is the primary fuel for the vast and essential road freight sector, every incremental addition to haulage costs ends up dampening both the transport industry and wider economic revival. It is imperative that authorities remove the speed breakers on the path back to normalcy.
