Petrol and diesel prices saw a Rs 3 per litre increase, prompting experts to suggest that this hike could spur investment in renewable energy and diversified supply chains. Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings, noted that the rise may lead to higher inflation by elevating transportation and production costs, resulting in increased prices for essential goods. He emphasized that nations reliant on oil imports might experience slowed growth, reduced industrial output, and decreased consumer purchasing power, but this situation could drive investments in renewable energy, energy conservation, and diversified supply chains, presenting both economic and strategic challenges.
Sharma highlighted the risks associated with excessive reliance on politically unstable regions for energy supplies. Given that India imports around 85% of its crude oil, the impact on foreign exchange reserves and fiscal stability is substantial, with a potential further increase in import expenses due to a weakening rupee. Jateen Trivedi, VP Research Analyst at LKP Securities, suggested that such price hikes could expedite the transition towards electric vehicle adoption and reduce dependence on imported fuel in the long run. He mentioned that while the hike may temporarily contribute to inflation concerns and affect transportation and consumption costs, it also reflects the government’s efforts to manage fuel subsidies and safeguard forex reserves amid global uncertainties.
Ajit Mishra, SVP Research at Religare Broking Ltd., pointed out that although fuel availability remains steady, the price hike is expected to heighten inflationary pressures throughout the economy. Mishra explained that escalating global crude oil prices, rising from nearly $69 in February to over $120 per barrel and currently standing at around $107, have placed oil marketing companies under strain due to increasing input costs and shrinking marketing margins. In Delhi, petrol prices surged by Rs 3.14 per litre to reach Rs 97.77, while diesel prices climbed by Rs 3.11 per litre.
Against the backdrop of the Middle East crisis, oil companies have also raised CNG prices, with a Rs 2 per kilogram hike effective immediately. The new CNG rate in Delhi now stands at Rs 79.09 per kilogram.
