Why India’s oil import price declining?
India have a sharply increased purchase of crude from Russia since Moscow’s invasion of Ukraine.
Due to the consequent western sanctions against Russian energy exports, the price India pays for an imported barrel of oil has been steadily declining.
Impact on the consumer
The softening in crude purchase prices has not percolated to the Indian consumer.
Pump prices of petrol and diesel have remained unchanged since May 22, 2022.
Impact on the consumer
Governments at the Centre and the States, and the oil marketing companies unwilling to forego any revenue, possibly as a way of insulating themselves from any rise in costs in the future.
The combined Saudi-cum-OPEC+ announcements of supply curtailment are a cause for some concern for oil companies given the potential they have to push up global oil prices.
Way forward
With retail inflation showing signs of easing in recent months and private consumption spending data showing a distinct lack of vigour as a result of the inflationary erosion in consumptive capacity, policymakers must reassess their stand on fuel prices.
The demand for bringing oil products under the ambit of GST so as to help rationalise fuel prices.
The Centre can take the lead and provide a fiscal fillip to the economy by cutting its levies on the key transport fuels.
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