As a result of the regular hike since the past six days, there is an increase of 0.50 paisa for petrol and 1.04 paisa for diesel all over India. The price of petroleum products had been kept at a moderate level during the last month, even when the global price of oil increased up to 10%. However, after the last phase of polling on May 19, petrol and diesel prices have increased regularly except on one day, May 22.
According to data from Indian Oil Corporation (IOC), the price of petrol in Delhi, Kolkata, Mumbai, and Chennai are Rs. 71.53, Rs 73.60, Rs 77.14 and Rs 74.25 respectively, on Sunday. And the price of diesel in Sunday is Rs 66.57, Rs 68.33, Rs 69.75 and Rs 70.37 respectively, in these metropolitan cities. Last Sunday, the price of petrol in Delhi was Rs 71.03 and diesel Rs 65.96.
As per reports, there are indications that the government issued instructions to the companies to keep the prices of petrol and diesel at a moderate level during election time. The oil marketing companies are arguing that the continuous increase in prices this week is due to the fact that the domestic prices had not been increasing for 15 days in tandem with the price of petrol and diesel in international markets.
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Last year too, during the Karnataka state Assembly elections, the price of petroleum products remained unchanged for a 19 day period, even when as there was a rise in global crude oil prices. During the 2017 Gujarat Assembly elections also, the price of petroleum products remained unchanged for a period of 14 days prior to polling. The current price rise follows the same trend of increase in fuel prices after polling.
The price of petroleum products are currently handled by India’s state-run oil marketing companies, such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited. They are now reviewing the prices of petrol and diesel in the country on a daily basis. The retail market is controlled by these companies, through its operational outlets which are almost 90% of the total. The remaining market is controlled by the private fuel marketers Reliance Industries and Essar Oil.
The other factor is that the price of petrol is dependent on the value of Indian rupee with respect to dollar. In May 2014, the value of Indian rupee to one dollar was 59.19, but by May 2019 it has increased to 69.70. In January this year, the price of the Indian basket of crude was $52.40 a barrel, but in early May it increased to $70.70, while there has been a slight decrease in the end of May.
If the value of rupee decreases again, it is going to affect India badly. India meets over 82% of its crude requirement through imports. If the value of Indian rupee goes down, the import become costlier. In addition to this, the growing tensions in the Middle East, between United States and Iran may also affect Indian imports, as India is heavily dependent on Iran for its fuel needs.
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