Increase in the prices of petrol and diesel in the country… After the Petroleum Minister, now the RBI Governor gave this big signal.

RBI Governor signals Fuel Price Hike: After Union Petroleum Minister Hardeep Singh Puri, now the Governor of the Reserve Bank of India has also indicated a similar situation on Wednesday that the prices of petrol and diesel are going to increase in the country. The burden on government oil companies due to rising crude oil prices is emerging as the main reason for this situation.

Governor Sanjay Malhotra issued a statement on the matter, in which he highlighted the rising tensions in the Middle East due to the ongoing conflict between the US and Iran. RBI Governor Sanjay Malhotra said that if this crisis in the Middle East continues for a long time, then the country may see an increase in the prices of petrol and diesel.

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So will petrol and diesel become expensive?

RBI Governor Sanjay Malhotra has indicated that if tensions in the Middle East persist for a long time, Indian oil companies may be forced to increase prices of petrol and diesel in the coming days. He further said that supply chains have been disrupted due to the possible closure of the Strait of Hormuz. It is an important sea route through which about 20 percent of the world’s total oil needs are transported.

As a result, rising crude oil prices, inflation and the country’s heavy dependence on fuel imports are putting a lot of pressure on the economy. His statement clearly underlines the increasing pressure on government oil companies due to the rise in crude oil prices.

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An ‘inflation bomb’ is about to explode on consumers – RBI Governor

Sanjay Malhotra made these comments during a summit held in Switzerland, jointly organized by the Swiss National Bank and the International Monetary Fund (IMF). According to the RBI Governor, if the current global energy crisis deepens and the situation worsens, the government will no longer be able to keep retail fuel prices stable indefinitely. If tensions persist for a long time, it will only be a matter of time before the government passes on a part of the increased cost of oil to consumers in the form of increased prices of petrol and diesel.

India, the world’s third largest oil consumer, is currently grappling with energy supply disruptions and a sharp rise in crude oil prices, mainly due to rising tensions around the Strait of Hormuz. Additionally, the potential closure of this vital sea route (the Strait of Hormuz) has not only disrupted supply chains but also heightened concerns about inflation and India’s ever-increasing energy import bill, issues that have now reached a critical point.

Why is rising crude oil prices a cause of concern for India?

Rising crude oil prices are a major cause of concern for India, mainly because the country imports most of its oil needs. As a result, any increase in crude oil prices increases transportation and manufacturing costs; Moreover, it puts pressure on the Indian rupee and leads to inflation.

At present, the government and government oil companies are bearing a large part of the burden of rising crude oil prices. Excise duty on fuel has already been reduced, while oil marketing companies continue to sell petrol and diesel at below market rates despite mounting losses. According to recent reports, oil companies are currently incurring daily losses of ₹1,600–₹1,700 crore.

Where have the effects of post-conflict inflation been felt?

Since the conflict between the US, Israel and Iran began, the government has taken several steps to mitigate the oil and gas crisis. While retail prices of petrol and diesel have been kept under control, state-owned fuel retailers have effectively passed on the inflation shock to other categories. Specifically, the prices of 19 kg commercial LPG cylinders, 5 kg LPG cylinders and jet fuel for international airlines have been increased. Recently, the price of commercial LPG cylinders saw an increase of ₹993. In contrast, the retail prices of petrol, diesel and domestic LPG cylinders have remained unchanged for the last four years.

PM Modi appealed to save fuel

Before the recent statement of the RBI Governor, Prime Minister Narendra Modi had also appealed to the citizens of the country to exercise restraint, especially to reduce the consumption of petrol and diesel, so that it can help in saving the country’s foreign exchange reserves. Additionally, Union Petroleum Minister Hardeep Singh Puri recently expressed concern over how long oil companies can continue incurring losses while keeping fuel prices unchanged. While speaking at a program, I am not saying that the prices of petrol and diesel will not increase.

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