Petrol, diesel price relief in sight? Centre weighs reduction
The BJP-led central government is contemplating a petrol and diesel price reduction as a Diwali gift to the public ahead of Lok Sabha and state assembly elections. The reduction, possibly 3-5 Rs per litre, may involve a decrease in excise duty. Recent LPG price adjustments aim to alleviate financial burdens amid rising inflation. Oil companies may consider cuts due to strong profits in FY24 H1.
In preparation for the upcoming Lok Sabha elections and state assembly elections in five states, the BJP-led central government is considering a possible reduction in petrol and diesel prices as a Diwali gift to the public.
There are reports suggesting a notable decrease in fuel prices nationwide, with the government viewing this as a Diwali gesture. Earlier this month, they lowered cooking gas prices for households and businesses. This move is seen in light of the upcoming state assembly elections scheduled for November-December, as well as the Lok Sabha elections in 2024. It's important to mention that a similar reduction in fuel prices took place during last year's Diwali season.
The potential reduction in petrol and diesel prices could be in the range of 3-5 Rs per litre, which could be achieved through a reduction in excise duty on fuel. Currently, crude oil prices are on the rise, which may make oil companies hesitant to lower prices. Even when crude oil prices have fallen in the past, fuel prices remained stable. However, reports suggest that revising excise duty is the more likely approach.
Recently, the central government cut the price of a 14.2 kg household LPG cylinder by Rs. 200 and offered an additional subsidy of Rs. 200 for beneficiaries of the Ujjwala Yojana. Now, with the crucial state elections approaching in November-December, the government is reportedly considering lowering petrol and diesel prices by Rs. 3-5 per liter by Diwali, according to JM Financial Institutional Securities.
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Just last week, the government raised the price of a 14.2 kg LPG cylinder by Rs. 200 for all 330 million consumers starting from August 30. This move aimed to ease the financial burden on the public amidst recent inflation. Looking ahead, any potential reduction in petrol and diesel prices around Diwali is expected to primarily involve adjustments in excise duty and/or VAT.
Oil marketing companies have faced challenges in the auto-fuel marketing sector due to surging crude oil prices. However, their strong profits in the first half of FY24 may enable them to consider price cuts.