Diesel prices could rise by Rs 1 per litre

You might not get the respite of a steady diesel price for too long as the Election Commission has rejected the Oil Ministry’s plea to shelve monthly increases in diesel rates. Diesel is still regulated in India but in order to get the prices on acceptable levels in line with global prices, a decision to gradually increase prices every month was taken in January 2013 by the cabinet. But last month, IOC, HPCL and BPCL, India’s largest oil companies did not increase prices.

The Government provides a fixed subsidy of Rs 6 per litre on diesel and since revenue losses fell below Rs 6, the April hike wasn’t necessary. But in May, these losses rose to Rs 6.8 per litre and so a price hike was needed but these companies did not raise rates.

The Cabinet had in January last year decided that diesel prices should be raised by 40-50 paise a litre every month until losses on the fuel are wiped out. Diesel prices have risen by a cumulative Rs 8.33 a litre in 14 installments since January 2013. 

Cumulatively, a two month hike will result in an increase in diesel prices by approximately Rs 1 per litre.