Rumour: Diesel prices in India could be hiked by 50 paise/liter; Petrol prices could fall by 1 rupee/liter

By midnight tomorrow, fuel prices in India could see changes. While prices of petrol could be revised downwards by 1 rupee/liter, the price of diesel could be increased by 50 paise/liter. This information is based on source based reportage that appeared on NDTVProfit. Frequent revisions in petrol prices have come to be a way of life in India ever since the Government deregulated prices of this fuel, a couple of years ago. Last year, diesel prices were deregulated partially and this has meant that state owned oil companies in India have begun revising prices of diesel on a regular basis.

Diesel Price Hike

An illustration to show Diesel Price Hike

Since the Indian government is saddled with a huge oil subsidy running to hundreds of thousand crores each year, the decision on partial diesel price deregulation has been taken in order to reduce the current account deficit that the country is staring at, mainly due to the fuel subsidy burden. Partial diesel price deregulation has been carried out in order to periodically hike prices of diesel through small monthly revisions rather than effect a big price hike of say about 10-12 rupees in a single shot. So, by the end of 2013, the price per liter of diesel in India could be anywhere between 55 to 60 rupees.

High prices of petrol and diesel have resulted in many car buyers deferring their purchases. This is one reason for the slowdown in the Indian car market, which is facing its slowest sales in a decade. With fuel prices continuing their inexorable rise each passing month, it is unlikely that the car industry will see a turn around in fortunes in the near term. The onus is now on car makers in India to build more fuel efficient cars. Notably, many small cars build in India are highly fuel efficient and the Indian government even has a policy to encourage the manufacture of small and  fuel efficient cars through an attractive excise duty benefit.

Going forward, expect more fuel efficient cars to be launched in India as fuel prices show no signs of coming down, what with the growing demand for automobile based mobility across the world and greater industrialization. Small capacity turbo petrol engined cars, electric vehicles and vehicles with hybrid technology are expected to come into the mainstream in the coming years.

Source NDTVProfit

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