The hike in petrol prices might have evoked a howl of protest across the country. But it does nothing much to change the fiscal deficit. The real test for the government comes in Friday’s eGoM (empowered group of ministers) meeting when it considers whether to hike diesel prices, which will have a direct impact on its subsidy calculations. As the chart shows, it is all the more important, because while Brent crude prices in dollar terms have fallen 13% in the past couple of months, that translates only to a 5% drop in rupee terms. Needless to say, that is due to the steep drop in the local currency. Notice the sharp rise in crude prices denominated in rupees in the last few days.
Graphics by Naveen Kumar Saini/Mint
Also See | Oil slicks on rupee (PDF)