Life after petrol hike

May 16 2011, 12:34 IST
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Protesters take their cause to donkeys in Pune. Protesters take their cause to donkeys in Pune.
SummaryHike disturbing, will hurt manufacturing, retail: Industry bodies

Reacting sharply to the petrol price hike, industry bodies in Pune have predicted a spiralling impact on all major sectors including manufacturing and retail.

“The hike is hugely disturbing,’’ said vice-president of the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA), S K Jain.

He said the hike is beneficial only to the government and not the private sector. “The hike will only discourage growth though government’s tax collection will show buoyancy. But it will hit consumers hard.”

Director General of MCCIA, Anant Sardeshumukh, said that sectors like the automotive industry and retail would take a hit. “The hike will reduce spending power of people as commuting expenses will increase. Given that earnings of people will not change in the middle of the year, the consumer durable industry will find it tough selling products.”

Tushar Mehta, Centre director, Phoenix Market City, Pune, said the impact on the retail sector will be indirect as the increase in petrol prices will shoot up the end users’ logistics charges. Sunny Singh, owner of Maharashtra electronics, a home appliances store, expects sales to dip.

Sardeshmukh said that consumer durable companies will have to offer discounts to keep sales going.

Automotive companies are banking on plans to increase the diesel variants of their vehicles.

A Mercedes-Benz spokesman said that the company policy of increasing availability of diesel variant vehicles was in line with the market demand, which was driven by increasing petrol prices. “Since diesel is cheaper, we are increasing availability of our diesel variants. That is relevant after yesterday’s hike,” he said.

Jain added that while the retail sector will hurt by consumer spending going down, the manufacturing sector will bear the brunt due to increase in transportation charges. “Transportation of raw material to industry sites will now become expensive. This will result in an increase in prices,” he said, adding that it will thus affect exports, too.

“The petrol hike comes days after the increase in loan rates. The combined effect of both will have a negative impact on the market,” said Jain.

The MCCIA vice-president suggested the government to bring import duties down to offset rising oil prices at the global market and prevent loss of momentum in the economy.

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