New Delhi: India’s state-controlled refiners hiked prices petrol by a steep 6.28 per litre, exclusive of taxes, effective midnight Wednesday to compensate losses incurred by them for selling the fuel at subsidised rates. The hike will be between Rs.7.54 and Rs.7.98 in the four metros and would be higher or lower in other cities depending on the extent of taxes levied by the concerned state.
The otherwise economically sound move by the government to offset a spiralling import bill at a time when the rupee has depreciated to a record low of Rs.56.19 against the dollar, however, raised the heckles of the country’s growing middle class which has been particularly vocal against the hike, as they are the most affected by higher petrol costs.
It also drew flak from the government’s allies and the opposition, alike who demanded a rollback.
India Inc. welcomed the government’s move, saying the increase had become inevitable with the continued slide of the rupee’s exchange rate.
“The inflationary impact of such an increase is once and for all and therefore transitory. It can be mitigated by reduction in taxes both by the central and state governments,” the Federation of Indian Chambers of Commerce and Industry said.
“Given the losses being incurred, the Company is compelled to increase the price of petrol by Rs.6.28 per litre (excluding VAT/Sales Tax) with effect from midnight,” the country’s largest oil firm, Indian Oil Company, said in a statement.
“This excludes losses already suffered till date during current financial year 2012-13, which would require an additional increase of around Rs. 1.50 per litre in selling price of motor spirit (MS) for balance part of the year,” Indian Oil said.
Petrol in Delhi will cost Rs.73.18 a litre, in Mumbai Rs.78.57 a litre, in Kolkata Rs.77.88 and in Chennai Rs.77.53 per litre.
The states levy sales tax of between 15 percent and 33 percent. Among the other levies are VAT and additional sales tax.
India deregulated petrol prices in June 2010 but continues to subsidise kerosene, diesel and cooking gas to protect the poor from the impact of inflationary pressures.
Petrol prices were last revised on Nov 4, 2011.
The oil companies have been losing Rs.8,000 crore per annum as they were being forced to sell petrol at subsidised rates.
Petroleum and Natural Gas Minister S. Jaipal Reddy had said Tuesday the depreciation of the rupee had necessitated an immediate increase in fuel prices.