The widespread public agitation all over the country for over a week against the steepest-ever petrol price hike of Rs. 7.54 per litre announced by the UPA Government would have continued unabated but for the revised price cut of Rs. 2.02 per litre as worked out by oil marketing companies (OMCs) after their fortnightly review meeting that considered in detail the falling trend in world crude prices. According to them, a further cut in petrol price below the level fixed was quite unimaginable in the prevailing situation of high-cost crude and the falling rupee. The revised price of Rs. 2.02 per litre would have meant more for petrol consumers had the rupee’s performance against the dollar not worsened to the extent it has. The growing under-recoveries of OMCs on the sale of petrol, diesel and other petro-goods when world crude prices ruled well above $117 a barrel remained a nagging problem. On petrol sales alone, they lost Rs. 7,100 crores in the past two years. This, together with the steady deterioration in the rupee value against the dollar – now at its low of 56.22 – rendered a petrol price hike unavoidable.
The consensus among the agitators seems to be that the Government should revise petrol prices only once every five years. The Government this time will have to yield to their demand not merely for a complete withdrawal of the price hike but an assurance that the price would never be hiked for the next five years. Their contention is understandable. When world crude prices touched a level of $140 a barrel, the petrol price didn’t exceed Rs. 35 a litre. Now, crude prices are on the decline. From a level of $111 a couple of months back, they have come down to $105 and are now ruling at $91 per barrel. Raising petrol prices now is most unwarranted and unacceptable.
Of immediate concern to SIAM is the huge imbalance that has set in the car demand pattern following the undue favours shown for diesel by subsidizing as well as disturbing its price the least. Even the revised petrol price hike would worsen the situation by depreciating the ‘value for money’ conception for petrol cars in favour of diesel cars. For instance, car manufacturers like Hyundai and Maruti Suzuki have already announced limited period discounts for petrol cars amid fears that the petrol price hike would encourage customers to go in for diesel cars. SIAM feels that the right remedy for this unhealthy trend lies in reducing the differential between petrol and diesel prices, implying thereby a cut in prices of the former and a moderate hike of Rs. 2-4 in the administered prices of the latter.