Diesel price hike set to hit where it hurts

Sep 15, 2012, 08:21 IST | Saurabh Katkurwar

Cascade effect to hurt aam aadmi in more ways than one, from having to pay more for essential commodities to costlier services and factory goods; freight charges set to rise by up to 50%

Photos: Shiv Sena protests against fuel hike

The recent diesel price hike is expected to bring about a cascading effect not only on essential commodities, but it will also affect several other sectors as well. In the end, the increased cost of transporting products will be borne by none other than the common man — the end consumer.

Belly blow
The prices of vegetables are anticipated to go up by 20 to 30 per cent due to the expected increase in freight or transportation charges. Local transport unions at the APMC market, which transport produce and commodities between APMC market and various locations in the city, are mulling over increasing freight charges by 50 per cent. Though a final decision is yet to be taken, officials of these unions claim that they cannot operate without increasing freight charges by 50 per cent.

Shiv Sena leader Manohar Joshi
Fuelling up: Shiv Sena leader Manohar Joshi with other party activists protest against LPG and diesel price hike at Sena Bhavan.

Krishna Patil, vice president of APMC Market Lorry Tempo Owners Association, said, “We are already incurring losses due to increased prices of spare parts, vehicle insurance and other such expenditures. We are left with no option but to increase our freight charges by 50 per cent, especially due to the recent diesel price hike.”

Shiv Sainiks also protest at Thane
Shiv Sainiks also protest at Thane, yesterday. Pics/sameer markande, SAYED SAMEER ABEDI

Patil added that a meeting has been called today to discuss the issue and to decide on the freight charge hike. Currently, these transport unions charge Rs 20 to 25 for transporting 10 kg of agricultural produce across Mumbai. However, rates are anticipated to increase to Rs 30 or 37 for 10 kg. Similarly, transportation charges for agriculture produce from rural areas to the APMC market is also anticipated to increase.

Shankar Pingle, director of the vegetable wing of the APMC market, said, “It is certain that every transporter will increase freight charges. However, the increase will be considered according to the distance of farms from the APMC market. Prices of vegetables and other agricultural produce fluctuates according to demand and supply ratio, but thanks to the diesel price hike, prices will be increased by 20 to 30 per cent in the next few days.”

Vegetables and milk
Transporters across the city and state have threatened to protest against the diesel price hike. “The base price has been increased by Rs 5, but it has actually gone up by Rs 6.20. We will protest against this move shortly,” said Sunil Kale, president, Bombay Goods and Transport Association (BGTA).

This association is now demanding that the government increase the current price of milk and vegetables by 10 to 12 per cent, which will add to the burden of the common man. They also claim that the sales tax in the state is 24 per cent plus cess of Re 1 per litre and other taxes totalling to almost 43 per cent.

Jagganath Jaiswal, a fruit seller, said, “The diesel price hike will definitely affect business. Once the cost of fruits increase, less people prefer buying.”

The association also held a meeting yesterday to discuss the issue. There are over 12,000 trucks and tempos plying in and out of Mumbai everyday carrying perishable items like milk, vegetables and fruits. These items are delivered to the main wholesale markets, to be further distributed throughout the city. The BGTA also wants the government to reduce VAT on diesel that is around 23 per cent, which also causes escalation.Aniket Visavalkar, a college student, said, “Every now and then they increase the prices. How will the middle class survive?”

Effect on industry
The diesel price hike is also set to impact industrial production, as a significant amount of this fuel is used by various industries in the MIDC area. “The price of diesel has just increased so there has been no immediate impact on industrial production. However, cost of production is anticipated to increase due to an expected hike in transportation charges. So, industries will either try to keep prices of products affordable by cutting profits, or the end consumer will have to face increased prices,” said Vishwanath Rajale, technical advisor of MIDC.

Emerging trend
Heads at sales departments of automobile showrooms claim that the trend of buying diesel cars will see a significant downslide and buyers will prefer CNG-run cars. “As per our statistic, people now seem to be inclined toward purchasing CNG-run cars in the recent past. However, the recent hike will deter buyers from purchasing diesel cars,” said Hridesh Mehtani, sales manager at SK Wheels.

Some not hit
JNPT awards contract for transportation of containers on the premises, and it does not seem to be facing a problem at the moment. “The diesel price hike does not affect us since we have given contract for internal transportation to a private transporter. However, exporters and importers will be affected since they will have to shell out more for transporting their containers from JNPT to Mumbai or vice versa,” said a JNPT official on condition of anonymity.

On the other hand, petrol pump owners claim the hike has not affected business. “Last night, there was a big queue of trucks and other diesel vehicles waiting to tank up. We have seen no decline in the number of vehicles visiting our fuel pump compared to yesterday,” said an owner of a petrol pump on Uran road in Navi Mumbai.

The loss making Brihanmumbai Electricity Supply and Transport (BEST) undertaking’s financial burden further exceeded by Rs 28.8 crore due to the diesel hike. For the transport division of BEST, which is facing losses of around Rs 400 crore in the current year, this amount would seem minuscule. However in the larger perspective, this will only add to the burden of the public, who could be charged extra for hoping onto a bus in the near future.

“This Rs 28-odd crore is the additional burden on us due to the hike in diesel prices. We wouldn’t be recovering it immediately, but will have to do so gradually,” said a BEST official. The undertaking operates 1,553 diesel buses that are part of their 4,700-strong fleet.

Peeved at the thought
Social activist Ravi Shrivastava said, “This hike is unwarranted and being forced upon the common man, who is already reeling under inflation, to benefit politicians. Why has the government hiked diesel prices when prices of crude oil in the international market have come down in the past few days? Also, the government charges over 25 per cent more on actual prices of diesel in the name of sales tax and VAT.”

Sushmita Rai, a professional working in a KPO, said, “How can the government increase prices of diesel when people are suffering due to major inflation already? Now, prices of all essential commodities will go up, which will make the situation all the more difficult for us. The government should roll back its decision in the interest of the citizens.”

Arun Bhise of Citizen Unity Forum, an NGO, said, “The government should hike prices of diesel when it is really necessary. However, it is unfair for the government to hike the price when people are reeling under huge inflation these days. This is all happening due to corrupt politicians and bureaucrats.” 

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