Petrol and diesel prices had remained constant through weeks of national lockdown to check the spread of coronavirus. On June 7 (Sunday) though, oil PSUs ended an 82-day hiatus and once again began revising prices on a daily basis. Since then, these prices have been shooting up with the revision on Wednesday, price of a litre of petrol in Delhi stood at ₹73.40 while diesel rate stood at ₹71.62 for a litre. (Full report here)
Rates have been increased across the country and news agency PTI reports that they vary from state to state depending on the incidence of local sales tax or VAT.
A number of factors continue to have an impact on the prices of petrol and diesel in the country. Several states have hiked VAT and/or local taxes on the two fuels in a bid to recover loses incurred during the lockdown period. The other major factor that is contributing to the current upward trend is that brent crude oil rates in the global market have nearly doubled in a month, up from historic lows in April. From somewhere around $21 per barrel, it is currently trading at $40 per barrel.
India fulfills nearly 80% of its crude oil requirements by importing it. As such, how INR fares against the US dollar also has an impact on fuel prices in the country.
As such, the last four days have witnessed petrol prices going up by ₹ ₹2.14 per litre and diesel by ₹2.23.
Rising fuel prices may have the potential of hurting demand for newer vehicles at a time when the Indian automotive industry is struggling to revive itself from the effects of Covid-19-related situations. While several analysts have predicted some momentum for passenger vehicle segment considering personal mobility may be preferred in Covid-19 times, rising fuel costs may figure highly in calculations made to determine whether to make a vehicle purchase or defer it.