Petrol Diesel Prices: Major drop expected soon? Finance Ministry awaits final nod
Recent Developments and Government Actions
- Anticipated Price Reduction: In anticipation of the 2024 Lok Sabha elections, the Indian government is considering a significant reduction in petrol and diesel prices. Sources suggest a potential cut of ₹4 to ₹6 per litre, with a possibility of reaching up to ₹10.
- Current Scenario: Presently, petrol and diesel prices stand at ₹96.71 and ₹89.62 respectively in Delhi, while exceeding ₹100 in cities like Mumbai and Bengaluru.
- Historical Context: The move comes nearly two years after the Centre’s decision to reduce petrol and diesel prices by cutting the Central Excise Policy by ₹8 and ₹6 respectively.
Influencing Factors and Market Dynamics
- Crude Oil Prices: A decline in crude oil prices in the international market, currently trading between $70 to $80 per barrel, is a significant factor in the proposed price cuts.
- Government Interventions: The Union government previously reduced Central Excise duty on petrol and diesel by a total of ₹13 and ₹16 per litre respectively, in two phases.
- Economic Impact: The anticipated fuel price cut is expected to dampen retail inflation, which rose to 5.55% in November.
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Petroleum Ministry and Finance Ministry: Coordination and Plans
- Regular Discussions: These ministries hold discussions every fortnight on fuel prices, recently submitting options to the Prime Minister’s Office regarding potential price cuts.
- Oil Companies’ Profits: The low crude oil prices have resulted in significant profits for Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL), and Hindustan Petroleum Corp (HPCL) in FY24.
Global Market Influence and Domestic Responses
- International Market Trends: Oil prices have steadied, with Brent trading near $80 a barrel, influenced by higher inventories and record output in the United States, among other factors.
- Indian Government’s Response: Union Minister for Petroleum and Natural Gas Hardeep Singh Puri credited the Modi government for the reduction in oil prices in India, contrasting it with the 70-80% increase in North American countries.
Conclusion and Future Outlook
The potential reduction in petrol and diesel prices marks a significant development in India’s economic landscape. It reflects the government’s responsiveness to international market trends and its commitment to providing relief to consumers. As the country approaches the 2024 Lok Sabha elections, these measures could play a crucial role in influencing public sentiment and economic stability.
