The oil ministry is planning to increase the prices of diesel and kerosene in frequent intervals of time, in order to lower the expenses paid by the government for fuel subsidies. The plan is to increase the prices of diesel by Rs. 10 over the period of 10 months and Rs. 10 for kerosene too, over the period of two years. The Indian fuel retailers, Indian Oil, Bharat Petroleum and Hindustan Petroleum are selling diesel, kerosene and cooking gas at discounted prices, which are set by the government.
The last price hike of diesel was done in September by Rs. 5.63 per litre and currently in Delhi, the diesel costs Rs. 47.15 per litre. The prices for kerosene oil have been unchanged since June last year and currently costs Rs. 14.79 per litre in Delhi. In order to sell these fuel products below their actual cost, the government compensates part of their losses. The Indian fuel retailers are currently losing Rs. 9.28 on every litre of diesel and Rs. 31 on every litre of kerosene oil they sell, according to the government data.
According to the government, the energy in India is under priced as compared to international prices, which include coal, petroleum products, electricity and natural gas. The price hike in diesel and kerosene will cover some losses faced by the government by providing huge subsidies towards fuel, food and fertilizers. This move from the oil ministry is likely to affect the sales of the cars in the Indian market as diesel is India’s most consumed fuel.