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India is not able to contain the inflationary pressure due to the rising crude oil prices, Minister of Petroleum and Natural Gas Dharmendra Pradhan said on Thursday.
“The rising crude price during the last few weeks is hurting the larger global economic recovery due to the significant demand contraction which might even mirror the impact of Covid-19 in its initial stages,” Pradhan said at an event organised by the International Energy Agency.
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“There is an urgent need to allow consumption-led recovery that has just taken root in several emerging and developing economies including India to continue in the coming months,” the minister said. “We are able to contain the inflationary pressures on several fronts but not those impacted by crude prices.”
Procurement price impact
Pradhan criticised major oil-producing countries for their decision to cut crude production, which has driven up procurement prices for the domestic oil refining and marketing companies. Brent crude price continues to hold its gains after crossing the $60-per-barrel mark earlier this month.
“The key producing countries have not only revised the production cuts over and above previously-announced levels but also added additional voluntary cuts,” Pradhan said.
Retail selling prices of petrol and diesel have soared in India, with the petrol price in Mumbai touching ₹96-per-litre on Thursday. Oil marketing companies have also hiked the price of LPG cylinders, the primary consumption fuel used across India.
“The price-sensitive Indian consumers are affected by rising petroleum product prices,” Pradhan added. “It also affects demand growth which could potentially impact the delicate aspirational growth trajectory not just in India but in other developing countries as well.”
The central government has meanwhile refused to lower the excise duty hiked during the dip in crude prices in the first half of last year after global demand had sharply contracted due to Covid-19.
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