Finance minister P Chidambaram on Thursday met petroleum minister Veerappa Moily, to discuss the strategies for minimising the impact of the falling rupee and the brewing Syrian crisis on India’s oil import bill and on the consumer prices of petrol, diesel and cooking gas in the country.
The petroleum ministry officials said the demand by oil companies for a one-time hike of Rs 3-4 per litre in diesel prices and the possibility of a cut in duties to minimise the increase in domestic fuel prices was also discussed.
The over 20% rupee depreciation this year and global oil rates spiking to a two-year high on Syria tension has meant heavy losses on sale of subsidised diesel and cooking fuel.
Losses on diesel sales at government-controlled rates have widened to R11 per litre from Rs 9.29 per litre at the beginning of the month and less than R3 per litre in May, even as prices are raised by 50 paise a litre every month. Besides, the oil companies lose Rs 33.54 per litre on kerosene and Rs 412 per 14.2-kg cooking gas (LPG) cylinder.
“We are all worried about rupee depreciation. All of us should do our best to reduce the tension on the economy. We are discussing how we can conserve energy and reduce fuel consumption,” Moily told reporters.
Moily refused to say if fuel prices will be raised next month but ministry sources said this option was seriously under consideration.
Every one rupee depreciation in the local currency against the dollar adds Rs 8,000 crore to the under-recovery.
Sources said the meeting also discussed the comments by global rating agency Fitch that said on Thursday that the rupee depreciation will have highest impact on state-owned oil marketing firms.
“We have to ensure that we help finance ministry to reduce CAD,” he said adding while India does import oil from Syria, the crisis will have an impact on international prices.