Ahead of the Lok Sabha polls, there are indications that the government may reduce petrol and diesel prices, considering the recent decline in global crude oil prices.
This drop in international oil rates is anticipated to ease the burden on oil marketing companies, enabling them to pass on some relief to consumers.
Sources suggest that the Ministry for Petroleum and Natural Gas has been evaluating potential price cuts for petrol and diesel, ranging from Rs 4 to Rs 10 per litre. Various scenarios and their impacts on oil companies have been analyzed to arrive at a viable reduction strategy.
To ensure a balanced approach, the government is contemplating a reduction in excise duty on petrol and diesel. This measure aims to prevent the entirety of the price cut from solely burdening the oil PSUs—Indian Oil, Bharat Petroleum, and Hindustan Petroleum.
The final decision regarding the magnitude of the price cut will reportedly be made at the Prime Ministerial level, indicating the significance of this potential move.
The last reduction in petrol and diesel prices occurred in May of the previous year when the Finance Ministry slashed excise duty by Rs 8 per litre on petrol and Rs 6 per litre on diesel.
Global crude oil prices have experienced a decline, with benchmark Brent crude hovering around $77 a barrel in recent days, down from the previous range of $85 to $90. This downward trend in oil rates is facilitating considerations for reducing fuel prices domestically.
Amidst these speculations, the shares of Indian Oil, Bharat Petroleum, and Hindustan Petroleum witnessed a 4 percent drop in Friday's trading session, reflecting market reactions to the potential price cut in petrol and diesel.
(With Agency Inputs)
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