Petrol is less than a rupee away from being more expensive than it has ever been for Indian consumers
- Petrol prices in India are less than a rupee from crossing their all-time high of 2018.
- Petrol in Mumbai currently costs ₹90.30 per litre and ₹83.71 per litre in New Delhi.
- The similarities between the 2018 oil crisis and the one happening now are similar in more ways than one except for one crucial difference — most people are working from home.
AdvertisementPetrol prices have been on a steady rise over the last two months in India. The last time oil was this expensive for the ordinary consumer was in 2018 when prices hit ₹91.39 per litre in Mumbai and ₹84.06 in New Delhi.
On December 7, petrol prices are only a rupee away from hitting new historical highs with petrol in Mumbai being sold for ₹90.30 and in New Delhi for ₹83.71.
Over the past three weeks, petrol prices have been revised 14 times and has increased by over 2.8%.
According to ICICI Securities, the hope for a successful vaccine is driving the prices of oil higher and higher.
What happened in 2018?
The critical difference between 2018 and 2020 is that there are fewer people feeling the impact with many working from home due to the coronavirus pandemic.
In 2018, the national general elections were just around the corner, the increase in fuel prices was impacting daily lives and the people weren’t happy. Public anger fueled by social media led the government to hold an emergency meeting in the middle of the night. Yet, the best solution offered was reducing the price of fuel by 1 paisa on May 30, which only invited more criticism.
The worrying parallel is that just as before, fuel prices remained unchanged for the days in the run-up to deciding elections.
In 2018, it was the Karnataka assembly elections and in 2020 was the Bihar assembly elections — both decisive for the ruling Bharatiya Janata Party (BJP).
Back then, changes to fuel prices were on hold in 19 days running up to the election. This time, petrol prices had been static since September 2 until November 20 when they started witnessing a surge again. Coincidently, the dates of the Bihar elections were October 28 to November 7.
Another issue then and now, is that India imports more than 80% of its crude oil requirements. The majority of India’s oil is imported from West Asia — Iraq, in particular.
The problem with high fuel prices isn’t only that the daily commuter faces the brunt. It has a cascading effect on transportation costs, which can drive up inflation — something the Reserve Bank of India (RBI) has already failed to keep below 4%.
In the Monetary Policy Committee (MPC) statement last week, RBI governor Shaktikanta Das said the inflation was likely to remain high in winter. And, the recent surge in fuel prices certainly does not help the central bank now.
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