India jacks up diesel, petrol prices in aftermath of state elections

Indian state fuel retailers have increased petrol prices almost daily since the curtains fell on key state elections. The government blamed the rapidly rising costs on the Ukraine war, while experts warned the price surge could derail livelihoods and businesses.

Activists from India's Congress party hold placards as they take part in a demonstration against the surge in prices of fuel and other essential commodities, in Srinagar on 7 April 2022. AFP - TAUSEEF MUSTAFA

Fuel prices were held in check since 4 November when political parties geared up to win favours with tens and millions of voters in five states where elections were held between February and March.

The national government cut federal excise taxes on petrol and diesel and several states doled out further tax cuts, aiding India’s teeming poor.

But the prices started rising steadily 12 days after the election results on 10 March saw India’s ruling Bharatiya Janata Party win in all but one state.

US-based Moody's Investors Services estimated state retailers lost two billion euros in revenue for putting fuel prices on hold for four-and-a-half months.

On 8 April, unleaded petrol in capital Delhi was pegged at €1.27 a litre while the same was sold for €1.46 in Mumbai, India’s commercial capital.

Petrol prices across India soared past €1.20 a litre, the highest-ever recorded since the country’s independence in 1947.

The cost of lifeline diesel also jumped rapidly in the same period while cooking gas became more expensive following three price increases in just over a month.

‘Every citizen in anguish’

The steps led to disruptions in parliament where MPs from six parties shouted slogans and asked the government to slow down.

“Common people are cutting on their other expenses to manage their spending on fuel,” opposition lawmaker Sougata Ray said in parliament.

“Every citizen of the country is in anguish and deep distress over the spiralling fuel and gas prices,” Ray said.

Congress, India’s main opposition party, said its supporters would protest across the country.

“We can see the prices are rising rapidly and the government is earning hundreds of millions (of euros) from it,” said Congress party leader Rahul Gandhi.

“The government has to stop doing this as this is hurting the poor and the middle class,” Gandhi added.

Pradhan Mantri Jan Dhan LOOT Yojana pic.twitter.com/OQPiV4wXTq

— Rahul Gandhi (@RahulGandhi) April 4, 2022

Ukraine war

Petroleum Minister Hardeep Singh Puri tried to stave off  protests in parliament on the same day India marked the 13th installment of the price increase since 22 March.

"Our percentage increase is one-tenth of what it is elsewhere," Puri argued.

Petroleum products in India are one of the most taxed commodities as state administrations depend on fuel revenue to keep themselves afloat.

And just days after the pump meters began clicking, Finance minister Nirmala Sitharaman blamed the roller coaster prices on the Russian invasion of Ukraine.

“If today in a globally-connected world, we say that the Ukraine (war) is affecting us, it is not accepted,” Sitharaman said in parliament.

“It has nothing to do with election time," she insisted ahead of the 14th increase in the costs.

Speaking about fuel price hike in the Lok Sabha during the discussion on #Ukraine, Petroleum Minister @HardeepSPuri says, “India’s % increase in gasoline prices at the pump b/w April 2021 & April 2022, is 1/10th of it is elsewhere… 5% in comparison to US’ 51%” pic.twitter.com/ORKMWghE1q

— Poulomi Saha (@PoulomiMSaha) April 5, 2022

Easing global prices

Global prices of crude soared after the conflict began. But they fell after hopes of ceasefire talks between Russia and Ukraine and predictions of an easing of demand by China because of a local Covid surge.

Critics argue the benefits must be passed on to the people of India, the world’s third largest oil consumer with a daily need of five million barrels of crude.

Others said India must follow in the footsteps of Australia, which has slashed excise on fuel for six months at a net cost of €2.7 billion to the budget.

• G7 foreign ministers get to work on global economic recovery, helping India

Petrol in India cost more than in the US but was cheaper than France, Britain and Germany, Globalpetrolprices.com reported this week.

“These comparisons make little sense as our per capita income is many times lower than that of all Western nations,” said A.S. Ojha, a retired university teacher.

The working classes are deeply worried.

“Can these politicians tell us how do we run our homes with a gas cylinder now costing 949 rupees (€11.5)?” asked Minati Mondol, a cook who earns €140 a month to support a family of three.