India to raise fuel prices from next week amid concern over inflation

Reuters | New Delhi

The Daily Tribune – www.newsofbahrain.com

India will raise petrol and diesel prices next week for the first time in more than four months as global crude prices soar after Russia’s invasion of Ukraine last week, three government officials said, amid growing concern about inflation.

Asia’s third-largest economy, which imports 80% of its oil needs, faces retail inflation staying above the central bank’s tolerance limit of 6% as companies pass on a nearly 40% rise in crude prices since November, as well as rises in prices for other imported raw materials, economists said.

State-run oil companies, which control the domestic market, have not raised prices since Nov. 4. “The oil companies would be free to raise prices in a phased manner once the election is over on March 7,” a senior government official with the knowledge of internal discussions on oil prices told Reuters.

State oil companies have told the government that they need a price increase of 10-12 rupees per litre for petrol and diesel, a second official said. A senior official at a staterun oil marketing company confirmed that they were facing difficulites though he declined to give figures.

“We are incurring huge losses,” the oil marketing company official said. The government was unlikely to cut fuel taxes to soften the blow, at least before the March 31 end of the fiscal year, considering the impact of that on state revenues, said another senior government official, with knowledge of the budget.

The federal and state governments, which collect over 100% tax on the basic price of petrol and diesel, cut factory gate duties and sales tax on fuel products in November, after a public outcry. “We may consider a proposal to cut fuel tax in April,” said the official with knowledge of the budget, referring to the cut in excise duties on petrol and diesel in November.

All three officials declined to be identified as the discussions are confidential. The finance and oil ministries declined to comment.