A litre of petrol will cost Rs3 more, while diesel, mainly used in transport of goods, power generation sets and running irrigation pump sets, will cost Rs3.50 extra.
NEW DELHI: Petrol and diesel prices will be increased marginally on Thursday to partly cope with the spurt in global oil prices.
A litre of petrol will cost Rs3 more, while diesel, mainly used in transport of goods, power generation sets and running irrigation pump sets, will cost Rs3.50 extra.
Poor man’s fuel kerosene and cooking gas are being spared the hike.
The oil ministry is putting up the proposal for an increase in petrol and diesel prices before the Cabinet on Thursday despite opposition from the Left parties to passing on the burden of the international oil price spiral to consumers. Left parties have demanded that duties and taxes be reduced to cushion of impact.
Oil minister Murali Deora met finance minister P Chidambaram on Tuesday, but officials said the finance ministry remained firm in its position against duty cuts.
Ministry officials said oil revenues form an important part of the budget and any revenue loss on that account will adversely impact the government’s social sector and developmental spending programme.
Oil ministry officials, however, indicated that the finance ministry is agreeable to issue of oil bonds of about Rs13,000 crore to PSU oil marketing companies to lessen their financial burden.
He said his ministry is working on a cabinet proposal aimed at cutting losses of public sector oil marketing companies with minimum burden on consumers.
Deora is also expected to meet Congress president Sonia Gandhi and Prime Minister Manmohan Singh before finalising his ministry’s proposal for the revision in fuel prices.
Petrol and diesel prices were last revised on September 6, 2005. India imports 70 per cent of its oil supplies.
WHAT WILL IT MEAN TO YOU
- A hike in diesel prices means freight rates will go up
- In other words, the cost of transporting commodities will rise
- So you end up paying that much more for fruits, vegetables, cereals etc
- Economists, however, say this will have only marginally effect on consumer spending
WHAT’S THE IMPACT ON THE ECONOMY
- If cost of commodities rise, inflation will rise too
- Which means value of money falls because prices are going up
- A fuel price hike reduces subsidies, and therefore, corrects distortions in economy by that much
IMPACT ON COMPANIES, MARKETS
- There will be marginal negative impact on companies due to higher transportation cost
- The stock markets have already discounted a price hike
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}