This is the first price revision after the government annou-nced its new pricing policy for petrol and diesel, which allows OMCs to fix the prices of these two fuels within a band of 10 per cent. The present hike is due to the sudden surge in their prices in the international oil market.
According to OMCs, the actual hike is much more and the diesel price in international oil market has already breached the upper price band ceiling of 10 per cent fixed by the government.
A senior oil company official said: The consumer price of diesel would have gone up by another one rupee a litre if we were to pass on the actual impact. We have written to the government to compensate us by way of duty cuts as promised under the policy. In the absence of duty reductions, OMCs (IOC, IBP, BPCL and HPCL) anticipate a hit of Rs 200 crore in the next fortnight, on account of under-recoveries on diesel sale. Certainly, we are happy as otherwise the losses would have been much more.
On the other hand, consumers are unhappy as the price revision has come within a month-and-a-half. The last revision was on June 15 when petrol price was hiked by Rs 2 a litre and diesel by Rs one a litre.
Senior economists said the petrol and diesel price hike would have an impact on the inflation rate, which might touch 7 per cent level in the coming weeks.
Speaking to FE, BB Bhattacharya, Director, Institute of Economic Growth (IEG) said the full impact of this hike would be felt only after a couple of months. The rate of inflation could even go up to 7 per cent for a while. But this would be due to a combined impact caused by the fuel price hike and drought, he said, adding that about 10 per cent hike in fuel prices generally leads to a one-per cent increase in the inflation rate.
Crisils chief economist Subir Gokarn said: There will definitely be an impact on inflation and we may see the inflation rate touching 7 per cent.
For transporters, this price hike has added fuel to fire. This is because transporters had already announced a strike on August 21 to protest the imposition of service tax on goods booking companies.