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New Delhi: Domestic cooking gas (LPG) price on Tuesday, March 22, was hiked by Rs 50 per cylinder and petrol and diesel prices were hiked by 80 paise a litre each.
A 14.2-kg non-subsidised LPG cylinder will now cost Rs 949.50 in the national capital. PTI reported that a five-kg LPG cylinder will now cost Rs 349 while the 10-kg composite bottle will come for Rs 669.
The 19-kg commercial cylinder now costs Rs 2003.50.
This is the first increase in LPG rates since early October.
The petrol and diesel price hike comes after a four-and-half-month hiatus in rate revision. Prices had been on a freeze since November 4 ahead of the assembly elections in states like Uttar Pradesh and Punjab. There had been speculation that a hike announcement would arrive shortly after the results were declared in March 10.
Petrol in Delhi will now cost Rs 96.21 per litre as against Rs 95.41 previously while diesel rates have gone up from Rs 86.67 per litre to Rs 87.47.
In early November 2021, the Union government announced that it would reduce the Central excise duty on petrol and diesel by Rs 5 and Rs 10.
The move came after sharp criticism of the Union government’s strategy of maintaining high fuel taxes throughout the pandemic as a means of shoring up the Indian government’s fiscal deficit.
Opposition slams government
The Opposition parties were quick to attack the government on the price rise, with Congress, TMC and Left parties forcing adjournment of proceedings in the Rajya Sabha.
“Congratulations to PM Modiji for achieving his ‘target’ of Rs 1,000 per LPG cylinder in most parts of the country. There will now be daily ‘Vikas’ in petrol and diesel prices as well. The only affordable things under Modi Govt are communalism & Hatred. Everything else is expensive,” Leader of the Opposition in the Upper House Mallikarjun Kharge said in a tweet.
Slamming the price hikes, Samajwadi Party president Akhilesh Yadav said: “Another gift of inflation from the BJP government for the public… LPG cylinder in Lucknow is close to Rs 1,000 and in Patna above Rs 1,000! Elections over, inflation begins.”
TMC’s Saket Gokhale said with dealer commissions and GST, a cylinder now costs Rs 1,000. “Kerosene prices doubled in just 10 days. When asked in Parliament, govt is flustered. In India, hate films are tax-free while hunger of poor is taxed.”
Reasons for hike
Both LPG and auto fuel prices had been on a freeze despite the cost of raw material spiralling, first because of demand returning with economies globally – rebounding from the pandemic-induced slowdown, and then due to the Russia-Ukraine crisis.
Since June 2017, petrol and prices are to be adjusted daily in line with the benchmark international rate in the preceding 15 days. But, rates have been on the freeze since November 4, 2021, just after the Modi government cut excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre to bring down rates from record-high levels. Most state governments too lowered local sales tax or VAT.
Before these tax reductions, petrol price had touched an all-time high of Rs 110.04 a litre, and diesel came for Rs 98.42. These rates corresponded to Brent soaring to a peak of USD 86.40 per barrel on October 26, 2021. Brent was at USD 82.74 on November 5, 2021, before it started to fall and touched USD 68.87 a barrel in December.
International oil prices started rising again this year and jumped to a 13-year high of USD 140 per barrel earlier this month. Brent was trading at USD 118.59 per barrel on Tuesday.
To compound things, the Indian rupee tumbled to a record low of 77 per dollar.
India relies on overseas purchases to meet about 85 per cent of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.
The twin blows of oil prices, already up more than 60 per cent this year, and a weakening rupee may hurt the nation’s finances, upend a nascent economic recovery and fire up inflation.
Petrol and diesel prices need to be increased by up to Rs 25 a litre for fuel retailers to cover the losses they incurred when they kept rates on hold despite a rise in the cost of raw material, industry sources said.
Diesel sold to bulk and industrial consumers had already been raised by about Rs 25 per litre, indicating that there is a gap between retail pump prices and their actual economic value.
The basket of crude oil that India buys rose above USD 128.24 per barrel on March 9, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.
This compares to an average of USD 81.5 per barrel price of the Indian basket of crude oil at the time of freezing of petrol and diesel prices four months back.
But, oil companies are not expected to pass on the entire loss in one go, and they will moderate it – raising rates by less than a rupee a litre every day.
International oil prices have been on the boil ever since Russia put its forces on the Ukraine border last month. They spiked after it invaded the central Asian nation on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions.
While Western sanctions have, so far, kept energy trade out, a prospect for a full embargo of Russian oil and products is leading to the latest rally in international oil prices.
(With PTI inputs)