The falling economy had become a cause of concern for everyone as the fight for survival is becoming tougher with each passing day. Rising petrol prices had resulted in people shying away from buying new vehicles due to which the automobile industry was facing high percentage of losses. The sales graph had been sloping downwards since the past eight months and companies had to devise different marketing strategies so as to lure buyers to purchase their cars.
The automobile companies can now take a sigh of relief because authorities have announced a cut in the price of petrol. There are numerous petrol models in the Indian car market and this reduction of rates could bring a positive change for the automobile industry. The petrol price was decremented by Rs. 3.05 per litre whereas diesel prices were hiked by 50 paise per litre. This happens to be the first reduction in fuel price in over five months and the steepest in over five years. The price changes that have been announced by the oil companies do not include local sales tax or VAT and are now effective in the market.
Experts feel that the credit for the price reduction goes to the appreciation in the value of rupee whereas the diesel rates have been hiked in accordance with the practice of increasing in rates by a small percentage to cover losses. Petrol rates would be cut by Rs. 3.66, making it Rs. 72.40 per litre in New Delhi whereas it would cost around Rs. 79.49 per litre in Mumbai. Petrol prices have witnessed a reduction after almost five months as the last decrement was made on May 1st by Rs. 3 per litre. "The decrease in petrol prices has now become feasible because of reduction of motor spirit prices from about USD 117 per barrel to about USD 113 and appreciation of rupee against Dollar from about 66 to a dollar to about 63," said Indian Oil Corp (IOC).
The past few months have only seen petrol price increment due to the sharp depreciation in the rupee value. Since the month of June, petrol prices have witnessed increment seven times, totalling to Rs. 10.80 per litre, excluding VAT and Rs. 13.06 after including state tax. Petrol price was last upgraded on September 14th when rates rose up by Rs. 1.63 per litre to Rs. 76.06 per litre in Delhi. The diesel prices have been increased as per the the decision taken by the authorities permitting oil companies to hike prices in small amounts so as to cover up the losses that were being piled up heavily. Rates of diesel have been increased by 57 paise to Rs. 52.54 per litre in New Delhi whereas Mumbai inhabitants have to shelve out Rs. 59.46 per litre as compared to the earlier price of Rs. 58.86.
The latest hike in diesel prices is the ninth one since January 17th. Reports suggest that the losses incurred on diesel sales should have been covered up by now but the continuous decline in the rupee value of around 25 per cent since April, has worsened the situation and losses have mounted to Rs. 14.50 per litre. The good news is that the the recent appreciation in value of rupee against US dollar has reduced these losses to Rs. 10.52. This year has seen diesel rates rise by a cumulative of Rs. 5.39.
