Things seem to be getting worse for producers and consumers in the Indian car market. If the slump in demand and constant fall in the value of rupee was not enough, oil companies have dealt a severe blow by raising fuel prices yet again. Confirming the same on Saturday, it was revealed that petrol will now cost Rs. 2.35 more per litre, which would be exclusive of taxes. On the other hand, the price per litre of diesel is hiked by Rs. 0.5, without adding taxes. Shockingly, this is the sixth time the rate of petrol has been increased in the past two months whereas diesel price has been hiked eight times since the month of January. After the revision of prices, a litre of petrol in Delhi will now cost Rs. 74.1 whereas in Mumbai the revised rate is going to be Rs. 81.57 per litre.
Reports have provided shocking revelations, wherein the price of petrol has been raised by Rs. 9.17 per litre (excluding VAT) since the month of June 2013. If the increase was to be calculated adding the state tax, then the overall hike in Delhi has been by Rs. 11.1 per litre since June. From 1st of September, diesel was priced at Rs. 51.97 and Rs. 58.86 per litre in New Delhi and Mumbai, respectively. To put things into perspective, revised petrol prices in major cities are Rs. 74.10 (New Delhi), Rs. 81.57 (Mumbai and Kolkata) and Rs. 77.48 (Chennai) per litre. The revised diesel prices per litre in New Delhi, Chennai, Kolkata and Mumbai are Rs. 51.97, Rs. 55.37, Rs. 56.33 and Rs. 58.86, respectively.
These developments are set to take a further toll on the already poor condition of the Indian car market. Things have not been going good for car makers in India as the demand is slowing down continuously and sales are dipping. Companies were hoping to see a turnaround in their fortunes owing to the upcoming festive season. However, industry experts claim that things will not go as projected by firms because of the consistent price rise, which will increase the reluctance of buyers.
According to sources, oil companies in India are reviewing fuel prices at regular intervals. Over the past few months, statements from firms have revealed how they are continuously incurring losses on the sale of fuel. Justifying the hike in prices, firms have claimed that this is being done to bring the rates at par with international crude oil prices. Statistics and reports have claimed that the deregulation of price of petrol begun in June 2010. On one hand where the rate of petrol is essentially determined by market conditions, the government has managed to put a tab on the diesel prices by allowing limited increase per month. Earlier, it had been projected that the constant hike in diesel rates will be sufficient to bring things on level terms and losses would be wiped out. However, the constant fall in the value of rupee has prolonged the time period for companies and according to reports, they are losing around Rs. 12.12 per litre even after hiking the rates by Rs. 4.75 per litre in total.
And if reports are to be believed then the situation is going to worsen in the coming months. With the parliament session slated to end in October, there is a possibility of diesel prices being hiked by Rs. 3 to Rs. 5 per litre in a single go. Not only diesel, rates of kerosene and LPG could also be raised by around Rs. 2 per litre and Rs. 0.5 per cylinder, respectively, sources have claimed. In a recent interview, Oil Minister M Veerappa Molly suggested that the government should take strong measures to control the damage caused by losses incurred by the falling value of rupee and rising oil rates, which amount to somewhere around Rs. 180000 crore.
