New Delhi, May 15 (IANS): The Rs 3 per litre hike in petrol and diesel prices announced by the government is a fraction of the actual losses being absorbed by public sector oil companies amid soaring global crude oil prices that have crossed $100 a barrel, a senior official said on Friday. Sources revealed that petrol under-recoveries are currently estimated at around Rs 26 per litre while diesel under-recoveries are as high as Rs 82 per litre, making the Rs 3 hike a mere symbolic gesture compared to the financial burden being borne by Indian Oil, BPCL, and HPCL. State-run oil marketing companies, along with the government, are currently absorbing losses of nearly Rs 1,000 crore every day to prevent a sharp increase in retail fuel prices despite the surge in global crude oil prices triggered by escalating tensions in West Asia. The small increase reflects the Centre’s broader strategy of protecting consumers from the full impact of the global oil shock, with the government’s message being clear – it does not want Indian consumers to bear the full burden of rising global crude prices through steep increases in pump prices.
Officials warned that a sharp fuel price hike would have widespread inflationary consequences across the economy by increasing transportation costs, pushing up food prices, and hurting household budgets at a sensitive time for domestic demand. The Centre is also shielding the agriculture sector from global price shocks, with the government already bearing a fertiliser subsidy burden estimated at nearly Rs 2.25 lakh crore to protect farmers from rising input costs. Government sources described the situation as a “massive twin drain” caused by rising oil and gold imports, with India’s annual crude oil import bill estimated at around Rs 12-15 lakh crore and every $10 increase in crude prices adding nearly $13-14 billion to the country’s import burden. Officials noted that India’s macroeconomic fundamentals remain far stronger than during the 2012-13 crisis, with the current account deficit below 1.5 per cent of GDP compared with nearly 5 per cent during the earlier crisis, while Indian Oil refineries are operating round the clock at maximum capacity with the country maintaining 60 days of crude stocks, ensuring no shortage of fuel at present.