After increasing the prices of petrol previously, the UPA Government has now declared a Rs. 1.20 price cut on the same, with effect from April 15, 2013. Incidentally, this is the third reduction in fuel prices within one month. The latest cut was made due to a fall in international rates of crude oil.
The top retailer for oil in the country, Indian Oil Corporation (IOC), announced the decline in fuel prices. It said that this reduction was done on the back of reduced international crude prices, which went down from USD 119.23 to USD 116.61 a barrel. Commenting on international prices, the company said, “Rupee-US dollar exchange rate has, however, deteriorated slightly from Rs. 54.28 to a US dollar to Rs. 54.51." Though the company has decided to pass on the benefit of lowered petrol prices to consumers, it did not express why diesel prices were not increased by 40 to 50 paise, as per the plan. At present, Rs. 6.48 a litre is being lost on the cost of diesel.
Upon inclusion of VAT, the reduction petrol price in Delhi has come to Rs. 1.20 per litre, though the actual reduction is Re 1. This means that the new price is Rs. 66.09, as against the previous value of Rs. 67.29. Previously, here was a Rs. 2 litre decrease on March 16 and an 85 paise reduction on April 2 this year. Interestingly, this would not have any effect on the prices of diesel, even though a 40 to 50 paise hike was to be implemented on April 15, 2013.
The prices of petrol vary across different Indian states. So while petrol purchased in Mumbai costs Rs. 1.26 less at Rs. 72.88 per litre, it is available in Chennai for Rs. 69.08, where the same rate cut has been implemented. As compared to this, the fuel is available at a price of Rs.73.48 a litre in Kolkata, where the last price was Rs. 74.72.
The fact that petrol prices have come down augurs well for the Indian auto industry and for the car owners. But no increase in diesel prices seems to imply that the Government is still under a lot of pressure for relaxing subsidies on diesel.