The most recent price increase, which is the first in eight months, occurs right after the North-Eastern states held a round of Assembly elections.The idea behind linking domestic petroleum product pricing to global crude prices when they were deregulated in the nation was to prevent oil marketing corporations from losing money due to price swings. Yet in reality, the prices have changed and are now associated with electoral cycles. In March and April 2021, there were elections for five states’ assemblies.
As the election results were announced in May, prices that had been steady up to that point increased significantly. The most recent increase has been designed to fall between the elections in the North-East and a number of other polls that will lead up to the Lok Sabha elections in 2024.
Source: The Economic Times The increases were implemented at a time and despite a decline in the price of crude oil on the global market. Since the start of the Ukraine War, India has been purchasing Russian crude at a price that is significantly less than the market rate. So, the necessity of raising fuel costs has been questioned. Even the conflict in Ukraine has been highlighted as a factor in the price increase.Nobody would accept the justification that marketing firms determine gas prices based on market conditions worldwide. The connection to elections disproves that assertion.
In 2020, when a home cylinder cost roughly Rs 600, the government ended the subsidy on cooking gas. The government did not reintroduce the subsidies because the prices had since increased. A subsidy of roughly Rs 200 per LPG cylinder is now only given to individuals who received cylinders through the Ujwala programme. There should be solid justification for price increases when gas is not subsidised.
Source: WionThe price increase coincides with a period of high inflation. The increase in LPG prices will add to the burden and have an effect on the consumer price index once the prices of all other basic items have climbed. Many restaurants have already raised the costs of food items because they are unable to cope with the significant increase in the cost of commercial cylinders. When the subsidy was eliminated, a large number of families that had begun utilising LPG gas ceased doing so. Now, more people might be compelled to give up their relationships.
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