The increase in petrol price, which the oil firms had been holding since January even though crude oil had touched a two-and-a-half-year high, came a day after election results of five state assemblies were announced
New Delhi: In the biggest ever price increase of the fuel, state-owned oil companies today hiked petrol price by Rs5 per litre with effect from midnight Saturday, reports PTI.
The steep hike in petrol price is likely to be followed by a Rs4 per litre increase in diesel rates and Rs20Rs-25 per cylinder increase in domestic LPG price later this month.
Petrol in Delhi will cost Rs63.37 per litre at Indian Oil Corporation (IOC) outlets in the national capital from Sunday as against Rs58.37 a litre currently, an official said here.
Even after the hike, oil companies will continue to lose Rs5.50 per litre and another increase in price is on cards soon, he said.
Bharat Petroleum Corporation (BPCL) hiked price by Rs4.99 per litre and Hindustan Petroleum Corporation (HPCL) by Rs5.01 a litre.
Petrol at BPCL outlets currently cost Rs58.39 per litre and at HPCL pumps Rs58.38 a litre.
The increase in petrol price, which the oil firms had been holding since January even though crude oil had touched a two-and-a-half-year high, came a day after election results of five state assemblies were announced.
The government had in June last year freed petrol price from its control but oil companies continued to follow ‘informal’ advice from the oil ministry on rate revision.
The three firms had not raised prices since January in view of assembly elections in states like West Bengal, Tamil Nadu and Kerala.
“The hike needed to make domestic rates at par with international prices was Rs10.50 per litre but oil companies chose to hike rates by less than half of that,” the official said. “Another hike in petrol price is on cards soon,” he said.
This is the eighth hike in petrol price since the June 2010 decision. Petrol in Delhi cost Rs51.43 after the 26th June decision of the government deregulating its price.
The official said Saturday’s hike in petrol price was made necessary because of rising borrowing of oil companies who faced severe working capital shortage in view of losses incurred on fuel sales.
IOC has seen its borrowing rise by Rs15,000 crore in last 45 days as it loses Rs296 crore per day on fuel sales.
Besides petrol, it loses Rs18.19 per litre on diesel, Rs29.69 a litre on kerosene and Rs329.73 per 14.2-kg LPG cylinder.
Bhaskar Prabhu, convenor of Mahiti Adhikar Manch, says the Right to Information movement must start from the home, through discussion and financial planning with all family members. He was addressing a Moneylife Foundation workshop on using the RTI Act effectively
The gains could fizzle out at 5,620-5,700 on the Nifty
It was a lacklustre week for the market despite positive domestic economic indicators. The last two days displayed contrasting trends with the market witnessing a sharp fall on Thursday on global cues, whereas it recovered on Friday, cheering the electoral results in the four states and one Union Territory.
The market ended flat on the first three trading days of the week, fluctuating between positive and negative. It ended with a sharp cut of around 1.4% on Thursday, but recovered its losses on Friday and closed over 1% higher. Over the week, the market was flat with a mixed bias, as the Sensex added 12 points, while the Nifty shed seven points.
Among Sensex stocks, Hindustan Unilever (up 12%), DLF (up 6%), Bharti Airtel (up 5%), ITC (up 3%) and Jindal Steel & Power (up 2%) were the top gainers. On the other hand, Maruti Suzuki (down 4%), Mahindra & Mahindra, HDFC (down 3% each), HDFC Bank and Hindalco Industries (down 2% each) were the losers.
The BSE Realty index gained 4% and BSE TECk rose 1%, while BSE Bankex and BSE Capital Goods were down 1% each, in the sectoral space.
As the market tries to shrug off the downtrend, Friday’s gains could lead to a short-term rally that could fizzle out at 5,620-5,700.
In economic news, the Index of Industrial Production (IIP) for March stood at 7.3%, compared to 15.5% expansion in the same month a year ago. However, the performance in March was an improvement from the 3.6% growth registered in February this year. This apart, IIP growth for 2010-11 fell to 7.8% compared to 10.5% in the previous fiscal.
Food inflation dropped to 7.7% for the week ended 30th April, the lowest level in 18 months. The rate of price rise in food items was 8.53% in the previous week and 21.46% in the comparable period of 2010.
India’s exports grew by an annualised 34.4% to $23.9 billion in April, maintaining the tempo of the last financial year, despite a decline compared to the 44% growth in March. Imports for the opening month of fiscal 2011-12 were up 14.1% to $32.8 billion, leaving a trade gap of $8.9 billion.
The country’s total merchandise exports aggregated $246 billion, growing by an impressive 37.55% in the previous fiscal. Imports in the fiscal 2010-11 were $350 billion, down by 21.6%, and the trade deficit was $104 billion.
Chief economic advisor Kaushik Basu suggested that the finance ministry’s 9% growth projection for this fiscal may have to be revised on account of the high global commodity prices and the ongoing debt crisis in Europe.
He added that the country’s headline inflation is likely to be around 8.5% in April, below the 9% average projected by the Reserve Bank of India for the first half of 2011-12.
Echoing a harsher outlook, the International Monetary Fund (IMF) earlier in the week, revised downwards India’s growth outlook for 2011 to around 8% on the back of high inflation and the overall global economic outlook, clouded by rising commodity prices led by oil. The multilateral agency earlier also moderated the country’s growth projection to 8.2% from 8.4%.
Markets have been worried about high commodity prices, rising inflation, rising interest rates and a slowdown in consumer spending, together with the potential downward GDP growth forecasts, and the consensus is that this will determine the trend going ahead.
State-owned oil firms are likely to get the go-ahead to raise the price of petrol by up to Rs3 per litre, which they have not revised since January on informal ‘advice’ from the government in view of the recent state polls. The government is also considering a Rs3-Rs4 per litre hike in the price of diesel as well as the price of domestic LPG by Rs20-Rs25 per cylinder.
On the international front, the People’s Bank of China increased the banks’ reserve requirements by 50 basis points, the eighth time since October, in an attempt to ease inflationary pressures. The 0.5 percentage point increase in the reserve requirement ratio was announced Thursday, a day after China said inflation touched 5.3% in April, with food prices soaring at 11.5%. It’s the sixth straight month that food prices have risen at double-digit rates.
The Bank of Korea (BOK) left its key policy rate unchanged for a second month in a row. Most economists had expected the BOK to raise its policy rate by 0.25 percentage point this month, as part of an offensive against rising prices. It, however, suggested that it will resume tightening in the near future.