Fuel prices have risen to present levels as a result of the combined effects of rising benchmark Brent prices and multiple tax increases over the last few years.
Higher costs are affecting the country’s expanding middle class, which has been the engine driving India’s economic and oil consumption development in recent years.
As ever-increasing government charges coincide with crude’s rebound from the depths of the Covid-19 epidemic, Indian pump prices are in uncharted territory.
Fuel prices have risen to present levels as a result of the combined effects of rising benchmark Brent prices and multiple tax increases over the last few years. The country’s transportation industry is agitating for change as record-high fuel and diesel prices leave some Indian automobile owners unable to afford the expense of operating their vehicles.
Buying fuel in major Indian cities such as Mumbai costs nearly twice as much as it does in New York, casting a shadow on Asia’s second-largest oil guzzler’s comeback as virus-related mobility restrictions are removed. Last year, the federal government raised taxes even as it declared a national emergency and world petroleum prices plummeted.
“High prices have an influence on gasoline demand,” said Senthil Kumaran, FGE’s head of South Asia oil. “However, the price effect will be less substantial at this time because the country is still recovering from the second round of lockdowns. Pent-up demand will outweigh high retail costs, thus the demand recovery will not be slowed. However, if high prices continue throughout July, the impact will be greater.”
According to Indian Oil Corp. statistics, gasoline prices in Mumbai have grown by more than 25% in the last three years, while diesel prices have risen by one-third in the same time frame. Inflationary pressures are mounting in the Indian economy as prices rise in response to a broad commodities boom.
With rising gasoline prices, India’s truckers have had enough. According to the All-India Motor Transport Congress, which represents more than 14 million truckers, bus and tourist vehicle operators, drivers have limited capacity to pass on increased charges, which account for around 70% of the cost of running a truck.
“The record high fuel and gasoline prices have damaged the livelihoods of millions of small transport operators and wage employees who are trying to make ends meet,” said AIMTC president Kultaran Singh Atwal. According to him, the organisation intends to hold a countrywide demonstration this week, followed by a general strike if the government does not decrease fuel costs.