New Delhi: As the Lok Sabha elections are anticipated in the first half of 2024, the government of India led by Narendra Modi is contemplating a reduction in petrol and diesel prices, according to government sources speaking to Business Today TV on Thursday.
The proposed price cut is expected to range between Rs 4 and Rs 6 per litre, as per the sources. Ongoing discussions involve negotiations with Oil Marketing companies to alleviate the burden on the common man.
A proposal is being considered, suggesting that both the government and OMCs share an equal responsibility for the price reduction, the report said.
There is also a possibility that the government might consider a more substantial price cut of up to Rs 10 per litre. Implementing a fuel price cut could have the additional benefit of mitigating retail inflation, which reached a three-month high of 5.55% in November.
Recent discussions between the Petroleum Ministry and Finance Ministry have resulted in the submission of options to the Prime Minister’s office. These ministries routinely engage in biweekly discussions on fuel prices.
The report quoting sources indicate that the government is inclined towards a fuel price reduction due to the stability of crude oil prices within the $70-$80 per barrel range over the last three months.
The government had previously reduced Central Excise duty by a total of Rs 13 per litre and Rs 16 per litre on petrol and diesel, respectively, in two phases in November 2021 and May 2022. These excise reductions were entirely passed on to consumers, resulting in a decline in retail prices.
The profitability of the three government-run oil marketing companies—Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL), and Hindustan Petroleum Corp (HPCL)—has surged in FY24 due to low crude oil prices.
Despite concerns about global trade disruptions in the Red Sea, oil prices stabilized on Thursday, with Brent trading near $80 a barrel. Higher inventories and record output in the United States have offset some of the apprehensions in the market.
