Understanding the Factors Behind the Continuous Increase in Fuel Prices in India

Prime Minister Narendra Modi, despite his efforts to control inflation by removing subsidies on petrol, diesel, and natural gas, has seen fuel prices remain high. This editorial explores the underlying factors contributing to the continuous rise in fuel prices in India.

Prime Minister's Policy Decisions and Economic Impact

Prime Minister Narendra Modi's policy decisions regarding fuel subsidies have played a significant role in the current situation. He has removed the subsidies on petrol, diesel, and natural gas, allowing petroleum companies to adjust fuel prices on a daily basis. This means that the prices are not controlled solely by the government but are influenced by the market dynamics, particularly the global crude oil prices.

Global Crude Oil Prices and Their Impact

The global crude oil prices have shown a steady increase, leading to higher fuel prices in India. This is due to the global supply and demand dynamics, exacerbated by the Russia-Ukraine conflict, which has caused a significant spike in crude oil prices worldwide. As a major importer of crude oil, India is inevitably affected by these global market fluctuations.

Government's Role and Attempts to Control Prices

The Indian government has attempted to control prices by reducing the Central excise duty on petrol. Additionally, the government has requested state governments to follow this reduction, although some states have not complied, leading to variation in pricing across different regions. This situation illustrates the challenges faced by the government in uniformly implementing price controls.

Strategies for Price Stabilization

In an attempt to mitigate the rising fuel prices, the government has decided to purchase Russian crude oil. This move is intended to stabilize or reduce the prices of petroleum products in India. However, the decision to buy Russian crude oil has drawn criticism from the US and the west due to the ongoing conflict with Ukraine.

Political Influence and Public Perception

Political parties on both sides are using the rising fuel prices to their advantage. The ruling parties and the opposition blame each other for the price hikes. The public, often uninformed about the underlying economic factors, tend to blame the ruling government or Parties for the price increases. This perception often leads to political instability and can impact the government's ability to implement effective policies.

Conclusion

While the government has taken steps to control fuel prices, the global economic factors and market fluctuations are major drivers of the fuel price increase in India. The public needs to understand that the price increases are not solely due to government policies but are influenced by a combination of local and global factors. Understanding these factors is crucial for making informed decisions and supporting the government's economic strategies.