Petrol prices at historic highs, breach Rs 85-mark today after yet another hike; diesel prices rise by 19 paise

With the government saying it is likely to take a long-term view on retail pricing of petrol and diesel and therefore, consumers not likely to be shielded from volatility in global markets, prices of petro products were hiked again today - for the 11th straight day. Significantly, petrol rates have crossed Rs 80-mark in over 11 cities. This is reportedly for the first time petrol prices have witnessed such high rates in India. 
Petrol price today increased by 30 paise, while diesel was retailing 19 paise higher as part of the daily revision by oil PSUs. The development has come a day after the government held meetings with oil PSUs. 
 
In corporate capital of India, Mumbai, price of petrol is over Rs 85, while in New Delhi at Rs 77.47, Rs 80.12 in Kolkata, Rs 80.42 in Chennai, Rs 78.73 in Bengaluru, Rs 83.08 in Bhopal, Rs 80.24 in Jaipur; Rs 82.71 in Jalandhar; Rs 82.94 in Patna; Rs 81.86 in Srinagar, Rs 80.50 in Gangtok, Rs 82.07 in Hyderabad and Rs 81.62 in Trivandrum. 
 
Similarly, Diesel,which has a cascading effect on consumers due to price rise in other products, is retailing at Rs 68.53 in New Delhi, Rs 71.08 in Kolkata, Rs 72.96 in Mumbai, Rs 72.35 in Chennai, Rs 69.71 in Bengaluru, and Rs 74.49 in Hyderabad. It may be noted that diesel prices never crossed Rs 70 in India. 
 
The fuel price scenario is heading towards a crisis situation in India as the continuous increase may boost inflation, which may trigger the Reserve Bank of India (RBI) to push key policy rates up by as much as 25 bps. 
 
The government on Wednesday indicated that it could change the way pump prices are calculated. In June last year, the government had junked a 15-year old practice of revising rates every fortnight, introducing daily revisions. The new policy worked well except in periods immediately preceding elections when it was put on hold. There was a 19-day freeze in revising rates before Karnataka went to assembly polls, and after May 14, rates have gone up by Rs 2.54 a litre in case of petrol and Rs 2.41 in diesel.
 
The 10-day relentless price increases built pressure on the government for cutting excise duty to give immediate relief to consumers, but after a meeting of the Union Cabinet headed by Prime Minister Narendra Modi, Law and IT Minister Ravi Shankar Prasad said, "(The) issue of frequent hike in fuel price is a matter of debate and concern. The government is involved in this whole process, including the concern (about rise in prices) and also the uncertainty." 

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Prasad told reporters, "The government is keen that instead of having an ad hoc measure, it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs. That process is underway."