On Tuesday, after perhaps the longest 137-day break in retail fuel prices in India in recent years, oil marketing companies hiked petrol and diesel prices by around 80 paise per liter, followed by a similar increase on Wednesday. A hike of ₹50 was also made in domestic cooking gas prices. Fuel prices were last changed in November 2021, following Deepavali-eve’s reduction of excise duties on petrol and diesel. The interregnum between yesterday and today, coinciding with the five Assembly election battles, also witnessed the largest rise in global crude oil prices among recent instances of price freezes in the Indian oil market. “deregulated” petroleum products. From around $73 a barrel on Nov. 4, crude prices are now hovering around $110 after rising above $130 immediately following Russia’s invasion of Ukraine. Typically, oil marketing companies revise retail prices daily, based on an average of the previous 15 days’ world prices for their preferred basket of crude. The government has distanced itself from fuel price decisions, saying there are no official guidelines to keep prices low. There is no evidence that oil companies have accumulated such large strategic reserves at past prices that they did not need to react to a cost spike of more than 50% for a product whose demand is largely met by imports. The fact that price increases, in small doses, only started after the formation of government in the states surveyed, makes it abundantly clear that a nudge and a wink from the majority owner of the players Public oil companies had pushed them to swallow higher costs, forcing private players to follow suit to compete.
Holding free market prices hostage to electoral politics, deployed so often in recent years, including the last time these five states went to the polls and the Lok Sabha campaign in 2019, is politically unfair, economically untenable and reflects an extremely cynical deployment tactic of the state apparatus. The fact that bulk diesel prices have risen by ₹25 per liter to ₹122 indicates that several more hikes are in sight to bridge the gap between costs and prices at the pump. Inflation, already above the comfort level, could rise further and the government could step in with more duty cuts at some point. But there are bigger red flags to worry about. No sane global investor will bid for Bharat Petroleum Corporation Limited, for example, if free pricing is effectively curtailed after a briefing from the Election Commission of India (ECI). This practice warrants wider consternation, not only because it undermines a fair electoral field in favor of dispensation to power, but also opens the door to other creeping dictates or deviations from political positions for gains. temporary in the perception of voters. Just as mysterious fuel pricing decisions have become commonplace, other transitional deviations from stated policy can also become habits of governance. While governments are obviously tempted to create an optic of benevolence towards the common voter, the ECI must rise up to take a firm position on the cancellations or postponements of routine decisions during an election period.