Steep fuel price hikes spark uproar in Parliament

Increase to ₹9 to ₹12 per liter of diesel and petrol; LPG cylinder up by ₹50

Increase to ₹9 to ₹12 per liter of diesel and petrol; LPG cylinder up by ₹50

After a four-and-a-half month freeze in fuel prices in the run-up to five state assembly elections, Indian oil marketing firms on Tuesday began to recover the higher cost of crude oil that had prevailed in recent months, raising 80 paise per month. liters at retail. gasoline and diesel prices, along with a 50 increase in domestic cooking gas prices.

Both Houses of Parliament were disrupted with opposition members demanding a rollback of the walks and leaving Lok Sabha, and Rajya Sabha’s proceedings were marred by protests from members who also joined the house’s pit and a discussion about the matter demanded.

Economists expect the gradual increase in the price of fuel to reach somewhere between 9 and 12 per liter of diesel and gasoline, rising to ₹20 per liter if the average global price of crude oil rises to $110-120.

Inflation trigger

Such increases would reverse the tax cuts announced by the government in early November 2021 and push retail prices for both fuels above 100 per litre. Price increases are expected to contribute to retail inflation, which has already been above 6% in the past two months, squeezing households and further denting consumption.

Petrol and diesel prices were last revised in November 2021, although crude oil prices have since risen nearly $30 a barrel, to even more than $100 a barrel, following Russia’s invasion of Ukraine. Prices for domestic cooking gas have been unchanged since October 2021.

According to PTI, petrol in Delhi now costs 96.21 per liter from 95.41 before, while diesel prices have risen from ₹86.67 per liter to 87.47. The price of an unsubsidized LPG cylinder has been increased to ₹949.50 per 14.2kg bottle in Delhi.

Earlier this week, the price of bulk diesel was increased by ₹25 per liter, while aviation turbine fuel prices rose by a record 18% last Wednesday, pushing them above ₹1 lakh per kilo liter.

Former head of Congress, Rahul Gandhi, spat out the government on Twitter, saying: “The price lock on gas, diesel and petrol has ended. Now the government is going to continuously ‘develop’ prices. If you ask the PM ​​to the inflation epidemic, he will say #Thaalibajao”

Dipti Deshpande, chief economist at rating agency CRISIL, said the pass-through of rising crude oil prices to domestic fuel prices is “inevitable and further increases can be expected,” the impact of which is expected to be largely reflected in April inflation data. .

“While lower excise taxes from last year will help mitigate the impact of rising international crude oil prices, it will not be enough to lower fuel inflation if Brent prices remain above $90 a barrel during the next fiscal year. In that case, the government may need to further reduce excise taxes to ease the burden on consumers,” she said.

consumption hit

Diesel price hikes will have the biggest impact, said Gaurav Moda, partner and energy leader at EY India, as they account for more than 50% of the country’s transportation fuel. “The rise in logistics costs will have near-immediate inflationary pressures on most of the goods we consume,” he noted, adding that LPG prices will hurt the unsubsidized industrial commercial segment.

“As crude oil prices averaged $100 a barrel in the current quarter, a full pass-through would require a ₹9-12 per liter increase in retail gasoline and diesel prices. And if the average price of crude oil rises to USD 110-120, the required increase would be USD 15-20 per liter,” said Hetal Gandhi, director of Crisil Research.

In the Lok Sabha, opposition MPs demanded a reversal of fuel price hikes and organized a strike. Shortly after Question Time, Congress leader Adhir Ranjan Chowdhury said the latest increase was expected as opposition parties had forecast diesel and petrol prices to rise after the Assembly elections.

DMK’s TR Baalu ​​and Trinamool Congress leader Sudeep Bandopadhyaya also joined the protest against the fuel price hike and urged the government to roll back.

Rajya Sabha witnessed two suspensions on Tuesday as opposition members protested the rise in fuel prices. The Senate was only able to function for a total of just 14 minutes in the first half as opposition members forced their way into the pit and demanded a discussion on the matter.

Earlier, when the House’s work began at 11 a.m., Speaker M. Venkaiah Naidu said that a notice under Rule 267 (suspension of the day’s work to discuss the said matter) was not allowed.

“There was a notice under Rule 267 by Shaktisinh Gohil, Dola Sen, Dr. Sivadasan, Elamaram Kareem and John Brittas on the prices of cooking gas, petroleum and diesel. This is not admitted,” said Mr. naidu.

This led to loud protests and the Chamber was adjourned until 12 noon. When the House resumed, members continued to protest. Vice-President Harivansh asked members to return to their seats.

“This is Question Time and as you know a lot of money is being spent preparing this hour, I ask Members to go back to their seats,” Mr Harivansh said. The Chamber was then adjourned until 2 p.m.

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