A little over a week ago, international crude oil prices dipped below $80 per barrel, creating a call across the country to slash petrol and diesel prices. But a reply given in Rajya Sabha by Harshdeep Singh Puri, Minister of Petroleum and Natural Gas, showed that India is the only major economy to have cut prices in the last two years.
The Minister is, however, only telling the half truth. While prices in India have moved lower in the last two years, they were hiked sharply in 2020 and 2021, as the Centre raised excise duties in March and May 2020 to absorb the fall in international crude oil prices following the outbreak of the pandemic. The retail selling price of petrol moved up from ₹69 in March 2020 to above ₹100 by September 2021. Following the public uproar, prices have been kept stable since then, with marginal cuts in excise duties by the Centre and the States on November 4, 2021, and May 22, 2022.
The cushion provided by the increases in 2020 allowed the Centre to allow retail prices of fuel to rise only marginally in 2022, when the Russia Ukraine war broke out. That is when most economies increased fuel prices.
According to Ministry data, between October 2021 and 2023, the price of petrol was down by 5 per cent, while diesel prices were down by 1 per cent in India. On the other hand, in the US, petrol prices and diesel prices went up 22 per cent 39 per cent in that period. The other major economies where the price went up include France, Spain, Italy, Germany, the UK, and Canada. Almost all of India’s neighbours, including Pakistan, Nepal, Bangladesh and Sri Lanka, also saw fuel prices go up. Apart from these economies, businessline’s analysis of data from globalpetrolprices.com, a website that captures fuel prices across the world, shows that the price of both petrol and diesel went up in China, too.
Not the lowest
A comparison of retail selling price across countries also shows that there is a case for cutting fuel prices in India. As of December 11, 2023, a litre of petrol (gasoline) costs $1.249 in India, according to globalpetrolprices.com. The price of a litre of petrol is lower in Canada ($1.214 per litre), the US ($ 0.912), Pakistan ($0.991 per litre), Bangladesh ($1.137 per litre), and China ($1.179 per litre).
Selling price is, of course, very low in oil-rich countries such as Iran ($0.029), Libya ($0.031), Venezuela ($0.035), and Kuwait ($0.341). A litre of diesel costs around $1.121 in India. It is cheaper in the US ($1.053), Pakistan ($1.02), Bangladesh ($0.99), Sri Lanka ($1.006), Nepal ($ 1.2) and China ($1.05).
Keeping this data in mind, there seems to be a case for reducing fuel prices in India after all.