The Russian invasion of Ukraine has fuelled speculations of a hike in fuel prices as global oil markets take a hit. In India the price hike of fuel had been kept in abeyance only because of the elections in UP, Punjab and Manipur. Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, earlier on Wednesday stated that any decision in hiking oil prices will be taken in the interest of the people. He however did not rule out that the Russia-Ukraine conflict will play an important factor in oil companies deciding oil prices. India relies on imports for nearly 85% of its crude oil requirement. At the moment the increase in fuel prices is nearly about 60 percent. The rupee has plummeted so low that one dollar today is equivalent to Rs 80. This is sure to hurt India and its oil companies. Corporate heads are already complaining that they are the most affected due to the hike in oil and gas prices.
Up until Tuesday the prices of petrol and diesel remain unchanged but India will not be in a position to hold back the hike. The world today is deeply interconnected and interdependent and so too the markets. One event like the Russian invasion of Ukraine will affect oil prices across the world. Although the Union Petroleum Minister has said that any decision with regards to oil and gas pricing will be taken ‘in the best interests of citizens,’ he has not unveiled India’s plans yet. Today crude oil prices have gone up to $140 per barrel in the global market, the highest since July 2008. India cannot remain unaffected. A hike especially in diesel will affect the common man as it will lead to run-away inflation. Political observers say that domestic oil companies, which control the market, have not raised prices since November last year with the aim of helping the BJP in the state assembly elections particularly that of Uttar Pradesh. Now that elections are over, oil companies can no longer take the heat. Apparently, Government will be raising oil prices in a phased manner. The Opposition parties are already gearing to push for fuel tax cuts when Parliament meets from March 14 next.
State oil companies have said they need a price increase of 10-12 rupees per litre for petrol and diesel to cut their losses. But the government is unlikely to cut fuel taxes at least before March 31, considering the impact of that on state revenues. For states like Meghalaya that rely heavily on road transport for goods, the impact of the hike on diesel prices will hit the consumers where it hurts most. The State Government is unlikely to cut down taxes on fuel because that is one source for revenue generation. The common citizen bears the brunt always!
