Modi government is planning to reduce petrol and diesel prices by 8-10 rupees. Currently, the petrol price ranges from Rs90 to Rs100 per liter, and in some areas, it costs around Rs110 as well, which is a burden for vehicle owners. We have details about the price cut on petrol and diesel, which the government will announce soon.
Article Highlights
Is This A Election Strategy:
Some rumors are going around about this fuel price cut. Reducing fuel prices may be the ruling party’s strategy to overcome the opposition statement regarding inflation in India, as fuel is part of determining the inflation in the country. On the other hand, the government is not reducing the fuel prices due to its high cost but rather due to a reduction in the purchasing price of crude oil prices.
Whatever the reason for reducing fuel prices is, it gives a step ahead for the ruling party against the opposition during elections. This will be a good strategy to get a lead over the opposition.
The proposal is Undergoing from petrolium minister to its approval by Prime Minister “Narendra Modi.” The announcement can come out any time soon after its approval within days. But will the government approve this proposal to cut the prices hugely as the world faces high inflation?
Impact On Inflation:
The petrol and diesel prices have been frozen since last April (2022), and even the government reduced the excise duty on them in May (2022) to control the inflation rate.
The petrol and diesel prices contribute to the “Wholesale Price Index”(WPI). The petrol amounts to 1.60% and diesel amounts to 3.10% in WPI, which determines the Inflation rate in the country. Currently, there is no inflation in the country, but experts warn that it will occur. The new cutting price of petrol and diesel will range from Rs8 – Rs10 per liter in both petrol and diesel if announced.
Oil Companies Profits:
The reports from oil companies of Bharat Petroleum Corporation Ltd(BPCL), Indian Oil Corporation Ltd(IOCL) and Hindustan Petroleum Corporation Ltd(HPCL) stated that they earned huge profits during April to September of FY 2023. Due to low prices of crude oil and buying oil from Russia at negotiable prices, the oil companies are currently making a profit of Rs8-Rs10 per liter in petrol and Rs3-Rs4 per litre in diesel. But the companies have yet to recover from the huge losses last year.
The purchasing price of crude oil for 2022-2023 stood at $93.15 per barrel, but the price in 2023-2024 saw a huge drop of $77.14 per barrel, which earned a total profit of 58.198crore rupees combined by all three companies in 2023. The companies’ profit came after the government announced extra support of 30,000 crore after seeing the losses incurred during 2022-2023. Still, the amount remained unused due to the low purchasing price of crude oil.
Daily Revision Of Prices:
The companies reported that they would turn back to the process of daily revision of pricing in petrol and diesel. However, it is still not confirmed when they will start again. Even if they consider this, due to the government’s high price cutting, it will not show an impact as previously. The revision of pricing will be in ‘Paisa’, which becomes up and down depending upon the international market of crude oil.
Conclusion:
This government price reduction can bring huge relief among the common people, strengthening its position towards the general elections in 2024. If the announcement is made, it gives a positive sign to the ruling party and additional support against the opposition to come into power once again.
“All the information shared here is from official sources, but the decision and announcement are yet to be made by the government.”
FACT: India purchased crude oil from UAE by payment in Rupees on 28th December 2023 as part of promoting local currency globally.
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