State-run fuel retailers raised prices of petrol and diesel for the fourth time in less than a fortnight on Monday. This takes their cumulative post-oil-shock increase in the price of each of these two fuels to about ₹7.5 per litre.
Despite the hikes, public sector oil marketing companies are losing a little under ₹600 crore per day on their sales, according to Sujata Sharma, joint secretary at the ministry of petroleum.
Sure, fuel retailers made outsized profits last year, when prices weren’t cut despite crude oil costing less globally, but more money could now be lost within a quarter, given this year’s bills, the ministry added.
Fuel price hikes are a hot-button issue in Indian politics, as they don’t just stoke inflation, but are widely seen as a public-policy decision more than a market necessity or business imperative. It would be better to snap this legacy link between populism and economic policy.
State intervention in crisis time can be justified in favour of stability and the West Asia war has been an exceptional blow to the economy. But oil usage needs compression globally and bills need to be widely shared for fuel prices to do their market job. A bullet boldly needs to be bitten on this reform.