50p hikes in diesel prices every month
Govt leaves it up to oil retailers to regulate the heavily-subsidised fuel prices, allows for small hikes every month to bring relief to loss-making oil firms, get a grip on deficit
Giving some latitude to fuel marketers ahead of the general elections next year, the government has authorised oil marketing companies (OMCs) to hike diesel prices by 50 paisa every month. The first hike came into effect from midnight on Thursday. The small monthly hikes, exclusive of VAT and other taxes, will translate to a hike of Rs 6 annually. The move is expected to provide a shot in the arm to an ailing Indian economy, rein in fiscal deficit while helping oil companies to recover their losses.
Petroleum Minister M Veerappa Moily has said that OMCs have been authorised to make small price corrections from time to time, as market conditions govern. Petroleum experts in Mumbai said the autonomy will help oil firms recover the deficit they have incurred by selling fuel below cost over a period of time. “These companies claim to be incurring a deficit of around Rs 10 per litre. Presently, the international crude prices are stable but they want to recover the money they claim to have been spending from their own pockets,” said an expert.
The move will affect public and private transport operators including BEST buses, trucks and tempos that ply on diesel. Said Bal Malkit Singh, president, All India Motor Transport Congress, “While granting the freedom to oil firms to affect diesel price hikes, there is a conspicuous absence of any regulatory mechanism or watchdog to safeguard the interests of the common man.”
Experts say the road industry wouldn’t be able to absorb any imminent hike in diesel prices and the government should reduce excise and customs duties and VAT on diesel, which constitutes around 50 per cent of the fuel’s cost. Earlier in the day, the government partially deregulated diesel prices by announcing that the price of the heavily-subsidised fuel would from now on be decided by oil companies. Incidentally, in a mild relief, oil firms are expected to cut petrol prices by 25 paise per litre from Friday.
The projected annual hike, exclusive of VAT and other taxes, in diesel prices
I seriously don’t know what’s happening. The common man is suffering because of inflation as it is. With the rise in diesel price, rates of essential commodities will go up, making it more difficult for the common man.
Suhel Majid, Andheri resident
At present if we want to purchase a new bus we have to shell out Rs 2 lakh more, as manufacturers have also increased the cost of new buses. With the increase in diesel prices, we will have to increase the fare and the decision regarding the same will be taken in the meeting that will take place on Jan 19
Anil Garg, chairman of the School Bus Owners Association