Team ICB, earlier today brought you a report about the empowered group of ministers meeting later in the day to discuss a possible hike in the price of diesel and LPG apart from taking a call on how best to deal with the under recoveries that the oil marketing companies have been making due to the subsidies on diesel and LPG. The word from the meeting is now out and we’ve just learnt that the price of diesel has now been increased by Rupees 3 per liter. Along with the price of diesel, prices of both kerosene as well as LPG have also gone up even as the government is about to face plenty of flak about the latest price hike since inflation is extremely sensitive to diesel prices.
What this also means is that, you the consumer will have bear the further brunt of inflation as a hike in diesel prices has a direct effect on inflation, with prices of essential commodities showing a increase due to the price of diesel. Meanwhile, the price of diesel has now risen to Rupees 40.75 per liter in the National capital New Delhi, up from the previous price of INR 37.75. This said, the latest hike in the price of diesel is a part of a gradual phase-by-phase process that the government will adopt to slowly reduce the burden on the state owned oil marketing companies which have been losing money especially on diesel and LPG.
The government for it’s part has stomached a 5% customs duty cut on all petroleum products, as a part of absorbing the under recoveries made by the OMCs which is expected to result in the government losing about 23,000 Crore rupees this fiscal year o account of revenue losses. The government has also cut excise duties on diesel by around 2.6 Rupees per liter, which will result in an additional 26,000 Crore rupees this fiscal year. So, the government is taking a hit here to ensure that the OMCs’ financial health remains strong. All said, the diesel car owner and commercial vehicle operator will still face the effect of the 3 Rupee hike on diesel even as the price of diesel remains around 17 rupees cheaper than petrol.
The government for it’s part has stomached a 5% customs duty cut on all petroleum products, as a part of absorbing the under recoveries made by the OMCs which is expected to result in the government losing about 23,000 Crore rupees this fiscal year o account of revenue losses. The government has also cut excise duties on diesel by around 2.6 Rupees per liter, which will result in an additional 26,000 Crore rupees this fiscal year. So, the government is taking a hit here to ensure that the OMCs’ financial health remains strong. All said, the diesel car owner and commercial vehicle operator will still face the effect of the 3 Rupee hike on diesel even as the price of diesel remains around 17 rupees cheaper than petrol.
