Steep increases in fuel prices cause an uproar in Parliament

After a four-and-a-half-month freeze on fuel prices ahead of five state assembly elections, India’s oil distributors on Tuesday began to recoup higher crude prices that have prevailed in recent months with an 80 paise-per-liter hike in retail petrol and diesel prices, along with an increase in the Cooking gas prices around ₹50.

Both chambers of Parliament were disrupted as opposition members called for a rollback of walks and left Lok Sabha, and Rajya Sabha proceedings were marred by protests from members who also poured into the well of Parliament demanding a discussion of the issue.

Economists expect the gradual fuel price hikes to add up to somewhere between ₹9 and ₹12 per liter of diesel and gasoline, which could rise to as much as ₹20 per liter if the average global price of crude oil rises to between $110 and $120.

inflation triggers

Such increases would reverse excise duty cuts announced by the Government in early November 2021 and push retail prices for both fuels above the £100 a liter mark. Price hikes are expected to push retail inflation, already above 6% for the past two months, putting pressure on households and further dampening consumption.

Gasoline and diesel prices were last revised in November 2021, although crude oil prices have since risen by almost $30 a barrel and even climbed over $100 a barrel following Russia’s invasion of Ukraine. Household cooking gas prices have not changed since October 2021.

According to PTI, petrol in Delhi now costs ₹96.21 per liter compared to ₹95.41 previously, while diesel prices have increased from ₹86.67 to ₹87.47. The price of an unsubsidized LPG bottle has been increased to ₹949.50 for each 14.2kg bottle in Delhi.

Earlier this week, the price of bulk diesel was raised by ₹25 per litre, while jet fuel prices rose by a record 18% last Wednesday, taking them past the ₹1 lakh per kiloliter mark.

Former Congress leader Rahul Gandhi attacked the government on Twitter, saying: “The lockdown on gas, diesel and petrol prices is over. Now the government will continuously “develop” the prices. If you ask the Prime Minister about the inflation epidemic, he will say #Thaalibajao.”

Dipti Deshpande, chief economist at ratings agency CRISIL, said the transmission of rising crude prices to domestic fuel prices was “inevitable and further increases are also to be expected”, with the impact expected to be largely seen in April’s inflation data.

“While lower year-over-year excise taxes will help mitigate the impact of rising international crude prices, it will not be enough to bring fuel inflation down if Brent prices stay above $90 a barrel over the next fiscal year. In that case, the government may need to lower excise taxes further to relieve consumers,” she said.

consumption stroke

The diesel price hikes will have the biggest impact, said Gaurav Moda, partner and head of energy at EY India, as they account for over 50% of transportation fuel in the country. “The rise in logistics costs will put almost direct inflationary pressures on most of the goods we consume,” he noted, adding that LPG prices will hurt the unsubsidized industrial trade segment.

“Given that crude oil prices have averaged around US$100 a barrel in the current quarter, a full pass-through would require a £9-12 per liter increase in retail prices for petrol and diesel. And if the average crude oil price increases to $110-$120, the increase required would be 15-20 pounds per liter,” estimated Hetal Gandhi, director of Crisil Research.

In Lok Sabha, opposition MPs demanded a reversal of fuel price hikes and staged a strike. Shortly after Question Time, Congress leader Adhir Ranjan Chowdhury said the latest price hike was in line with expectations as opposition parties had predicted diesel and petrol prices would rise after the general election.

DMK’s TR Baalu ​​and Trinamool Congress Chairman Sudeep Bandopadhyaya also joined the protest against the increase in fuel prices and called on the government to reverse the measures.

Rajya Sabha saw two adjournments on Tuesday as opposition members protested the rise in fuel prices. The upper house was only able to work a total of 14 minutes in the first half as members of the opposition poured into the shaft demanding a discussion on the issue.

Earlier, when House proceedings began at 11:00 am, Chairman M. Venkaiah Naidu said that a notice under Rule 267 (Stopping Business to Discuss the Matter Specified) was not allowed.

“There was a Rule 267 notice from Shaktisinh Gohil, Dola Sen, Dr. Sivadasan, Elamaram Kareem and John Brittas on the prices of cooking gas, petroleum and diesel. That will not be admitted,” Mr Naidu said.

This led to loud protests and the House was adjourned until 12 noon. When the house resumed, members continued to protest. Vice-Chair Harivansh urged members to return to their seats.

“This is Question Time and, as you know, a lot of money is being spent preparing for this hour. I urge members to return to their seats,” Mr Harivansh said. The House was then adjourned until 2:00 p.m.