Brace up for steep petrol price hike after Lok Sabha elections

You may have to face a steep hike in the price of petrol after Lok Sabha elections.

With the rise in global crude oil prices, the price of the Indian crude basket has risen by almost 38% in the calendar year 2019, while the increase in the retail prices of petrol has been nominal.

Stakeholders say this could mean that petrol consumers will be in for a big shock in about a month from now.

The basket for crude oil for India was priced at $52.43 per barrel on January 2. As on May 2, it has risen to $72 per barrel. This is a rise of 37.33%. However, during the same period, the price of petrol in Ahmedabad rose from Rs 66.23 per litre to Rs 70.45 per litre, a rise of just 6.37%. Similarly, the price of petrol in Mumbai rose 5.92% from Rs 74.3 per litre to Rs 78.7 per litre.

Market players believe that the price of petrol in the retail market has not risen because the government did not want to risk public ire, just ahead of and during elections.

Since March 10, when the election schedule was announced, the price of the Indian crude basket has risen by 8.43%. On March 10, the price of the crude basket is at $66.4. In the same period, petrol prices have risen by 0.86% in Mumbai and 0.84% in Ahmedabad.

"The manner in which the price of petrol is controlled, we feel sure that the retail price will rise after results are announced," said Arvind Thakkar, president of All Gujarat Petroleum Dealers Association.

Economist Hemantkumar Shah said, "By increasing the taxes, when the global oil price was low, the government had got Rs 16 lakh crore over these years. If it would have not been for elections, the prices would have gone through the roof," said Shah.

Transporters fear that if diesel is also subjected to the price hike, then it will have a cascading impact on prices of items of daily consumption. "It would not only be inflationary, but recessionary as well. Orders are difficult to come by. So if costs rise and demand does not, then things will be very difficult," said Mukesh Dave, chairman of the transport committee of Gujarat Chamber of Commerce and Industry.