Petrol, Diesel Prices Hiked By Rs 3 Amid Iran War, CNG Up By Rs 2

Petrol, Diesel Price Hike: Following days of anticipation, the Centre has finally hiked retail selling prices of petrol and diesel in four metro cities. The hike, effective from Friday (May 15), is the first in four years for retail consumers. The price of CNG has also been raised by Rs 2.

Here are the revised petrol prices (per litre) in the four metros:-

Here are the revised diesel prices for consumers in the four metros:-

Meanwhile, the CNG price in Delhi has been raised by Rs 2 per kg — from Rs 77.09 per kg to Rs 79.09 per kg. A day earlier, CNG price was also raised in Mumbai by Rs 2 per kg. The green fuel will now cost Rs 84 per kg across the Mumbai Metropolitan Region (MMR).

OMC Losses Mount

Before this hike in retail fuel prices, the prices of premium petrol were raised in March. All the three major oil companies — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — had raised the prices of premium petrol and diesel.

However, these state-run oil companies were still bearing a loss of about Rs 1,600 crore daily. They were buying crude oil at a higher price, but not passing on the increase to retail consumers. They even approached the central government in this regard. According to media reports, the Modi government refrained from raising the fuel prices (so far) to keep inflation under control — a rise in fuel prices impact the price of every other commodity.

India’s major oil marketing companies (OMC) had their books in green before the Iran war began on February 28. When the war started impacting global crude oil prices, they tried to absorb the shock. However, the losses started mounting within weeks as the war sent international oil prices soaring by over 50 per cent. The basket of crude oil that India imports averaged $69 per barrel in February before the war in West Asia broke out. It averaged $113-114 per barrel in subsequent months.

Therefore, several top economists, including Finance Commission of India Chairperson Dr Arvind Panagariyasaid petrol, diesel prices should be allowed to rise.

PM Modi’s Appeal To Save Fuel

Earlier, Prime Minister Narendra Modi also urged citizens to conserve fuel, and work remotely (if possible). This, he said, would reduce India’s foreign outflows and save forex reserves.

Backing the PM’s call, the Government of Delhi led by Chief Minister Rekha Gupta announced a 90-day public campaign aimed at encouraging citizens to adopt lifestyle changes that reduce fuel consumption and support the domestic economy. She also announced two days work from home for government offices.

It is worth mentioning that India maintains around 60 days of fuel stocks and nearly 45 days of LPG inventories despite continuing volatility in global energy markets. The Centre has also repeatedly asserted that there is no fuel shortage in the country.

Petrol, Diesel Price Rise: Impact On Inflation

A price hike in petrol, diesel, and CNG directly fuels inflation by raising transportation and logistics costs. Earlier this week, milk prices were also increased. Any rise in the prices of such essential commodities erodes household savings and reduces people’s discretionary spending power, thereby weighing on economic growth.

The logic is straightforward: when prices rise, real consumption tends to slow. Lower consumption, in turn, dampens production. As production weakens, overall economic growth (GDP) also comes under pressure.

However, this growth-inflation trade-off was largely inevitable. Global crude oil and gas prices have surged due to the ongoing Iran war, making domestic prices unsustainable. As a result, a portion of the cost increase had to be passed on to consumers.