Household budgets, already reeling under record inflation, will come under further strain as Public Sector Unit (PSU) oil companies today hiked petrol rates by Rs 3.14-3.32 per litre. This is the second hike in petrol prices in four months.
Indian Oil Corporation (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum had raised petrol price by Rs 5 per litre in May. Diesel, domestic LPG and kerosene price were hiked in June by Rs 3 per litre, Rs 50 per cylinder and Rs 2 per litre.
Indian Oil prices for petrol in Delhi will now be Rs 66.70 per litre and Rs 67.49 per litre in Chandigarh. The under-recovery on petrol was to the tune of Rs 3, which has been covered.
The Confederation of Indian Industry (CII) said that hat the hike in petrol price was necessary for controlling under-recoveries of oil marketing companies. This might add to inflation, but status quo would have meant increased fuel subsidy borne by the government resulting in additional borrowing.
State-owned oil companies are losing Rs 263 crore per day on selling diesel, domestic LPG and kerosene below cost. Diesel is being sold at a subsidy of Rs 6.05 a litre, kerosene at Rs 23.25 per litre while domestic LPG rates are under-priced by Rs 267 per 14.2-kg cylinder.
The losses for these companies in the first half of the year were at Rs 65,000 crore on these three products. For the full year, revenue loss is estimated at Rs 1.21 lakh crore at the price of Indian basket at $ 110 per barrel.
With continuous rise in petrol prices, and diesel still being regulated, the price difference between the two has widened. With diesel being sold in Delhi at around Rs 41, the gap is Rs 25. This is skewing car sales to diesel versions. The share of diesel cars in the total market has gone up to 30 per cent now and is rising every month as more manufacturers are dishing out diesel variants to catch up with demand.