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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 UPAGov-
ernment 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 un-
imaginable 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. Rais-
ing 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 subsidiz-
ing 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, imply-
ing thereby a cut in prices of the former and a moderate hike of Rs. 2-4 in the
administered prices of the latter.
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Edited & Published by R. Natarajan on
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Editorial
www.motorindiaonline.com
Controversial petrol price hike
R. Natarajan, Managing Editor & Publisher
MOTORINDIA
8
MOTORINDIA
l
June 2012