Explained: Why fuel prices are rising sharply in India
Alitre of petrol now costs upwards of Rs 90 in some Indian cities like Mumbai and Jaipur. Across most other cities and towns in the country, petrol costs remain in the upper band of Rs 80. Diesel prices have also increased sharply, well-above Rs 80 in cities like Jaipur.
The fresh hike in petrol and diesel prices could pose a major challenge as India’s economy looks to recover from the damage inflicted by the coronavirus-induced economic slowdown.
But why are fuel prices rising in the country? There are two possible explanations — Increase in global crude oil prices and higher fuel taxes levied by the central and state governments.
Mapping the fresh rise
Just over two weeks ago, fuel prices started rising in India. And five days ago, Brent crude oil price rose to its highest level since March. This happened after an OPEC+ output cut deal.
After increasing initially, crude oil prices have fallen again as many countries are mulling restrictions due to rising Covid-19 infections.
Though petrol and diesel prices have been kept unchanged today, the latest round of hikes — Over Rs 2.3 per litre for petrol and over Rs 3 per litre for diesel — over the past 17 days can impact improving fuel consumption demand in the country.
