The coming weeks could spell good as well as bad news for consumers of auto and cooking fuels.
Petrol prices are expected to be cut by Rs. 1-1.50 per litre mainly due to falling global crude oil prices and an appreciating rupee, oil company sources said, adding, a decision on raising in diesel and possibly LPG rates is likely in a few weeks.
While petrol prices, which are revised on the 1st and 16th of every month based on average imported cost in the preceding fortnight, looks set to be lowered on September 15/16, the government is mulling a Rs. 3-5 per litre hike in diesel and Rs. 50 per cylinder hike in LPG rates, sources said.
The recent recovery in the rupee, which hit a record low of Rs. 68.85 vs dollar last month and a fall in global oil prices following easing of tensions in Syria, had eased the pressure for an immediate price hike, petroleum secretary Vivek Rae said on Thursday.
He said the issue of a one-time hike in diesel and cooking fuel rates “is a political and economic challenge” from which “we cannot run away,” “Some burden has to be borne by the consuming population.
That is the challenge the government faces. It is a political challenge, it is an economic challenge. It is a challenge we cannot run away from.”
He added that the subsidy burden has reached unsustainable levels, which cannot be financed by the government and oil companies.
Fuel subsidy, he said, rose Rs. 20,000 crore in the last two months alone due to a depreciating rupee that made imports costlier.
With limited financial resources, the government cannot run the risk of inflating the fiscal deficit further, he added.