Thursday, 8 December 2011

Rising petrol price - a worry among car owners

November 16th 2011 was a moment of rejoice among petrol consumers across India, as for the first time since the deregulation of petrol took place, a roll back of the hike in petrol price was announced. Indian petrol consumers have not seen a downward revision of the petrol prices since January 2009 and have always been greeted only with innumerable hikes in fuel price. The recent hikes in petrol price were justified on the grounds of rising price of crude oil on a global level, which has caused huge under-recoveries and depreciation of rupees against dollars.

The price of petrol went up by Rs 1.82 per litre on November 3rd 2011. The state-owned oil companies responsible for this got counterattacked with loud protests from the opposition parties as well from the ‘compulsive populist’ Mamata Banerjee led Trinamool Congress, one of the key allies of the UPA government. The government has, however, managed to save its face this time, although initial suggestions of rollback were completely brushed off. The steady value of the rupee compared to the dollar and the falling price of crude oil internationally helped the government make the decision. Now the basic price of petrol has been cut by Rs 1.82 per litre although the exact price in different states shows variations due to taxes at state-level. However, as with many other countries, the price of petrol still remains higher.

The impact of the spurt in fuel bills has sharply been registered in the two-wheeler sector and for the booming car market of India since it has raised huge concerns. The auto industry is already witnessing a slowdown in sales and the trend seems unlikely to change under the current scenario. The burgeoning Indian middle class is likely to feel the impact and with that the small car market is sure take a downward dip. With foreign auto makers like Nissan, Volkswagen making entries in the Indian market and companies like Toyota coming up with India specific models, this trend is definitely going to create a dent in market with more people postponing their purchase.

Car owners relying on alternative modes like options of car pooling and public transport are on the high. The high petrol price has, however, proved to be a boon for the diesel car market because of the steep price differences in the two fuels. This has increased the sales of diesel cars to about 52% in September 2011 from around 48% the same time last year. Diesel cars raise ecological concerns but as they are cheaper to maintain and run, they have become the more popular choice. The recent rollback of petrol price has boosted the mood of petrol car owners and users but it remains to be seen if any more steps are taken in the future to keep petrol costs under control.

Written by :


Post a Comment

Twitter Delicious Facebook Digg Stumbleupon Favorites More