When the BJP government took charge in May 2014, the Indian basket of crude oil prices averaged $106.85 a barrel, but fell to as low as $28.08 a barrel in January 2016. Compared to 2014, the Indian basket prices were at a much comfortable level of $69.67 a barrel.
To make increase in fuel prices
comfortable for consumers, the previous government had introduced daily pricing in June 2017. Before that prices used to be revised fortnightly, though there were aberrations when oil-marketing companies were informally told not to increase prices.
In 2014, fuel prices
were revised on May 13, while the results were declared on May 16 and the new government took charge on May 26. In almost a repeat of the 2014 elections, the BJP and its allies have won 353 of the 543 seats in the Lok Sabha.
However, one of the major concerns before the new government would be rise in international prices.
“International crude oil prices are expected to move up. In addition to this, our crude oil and gas imports are increasing. Hence, the challenge before the new government will be having a realistic approach,” said R S Sharma, former chairman of state-run Oil and Natural Gas Corporation (ONGC). He added imported liquefied natural gas (LNG) would be 40 per cent cheaper than imported crude oil and the new government should firm up a strategy based on this reality.
Indian fuel prices
are more dependent on international product prices. In addition, the retail petrol and diesel prices are a mixture of various factors including the excise duty, value-added tax and dealer prices and commission.
In May 2014 diesel prices were subsidised while its complete deregulation happened in October of the same year.
Compared to 2015-16, the global situation may not be favourable for the new government. “We expect a further move towards $75.95-77.93 in the near term while key support levels are seen around $70.57-68.66 per barrel,” said Abhishek Bansal, chairman of ABans Group of Companies, a broking services firm. The reasons Bansal cited a probable increase include the intensifying tensions between the US, Iran and Venezuela. “Saudi has signalled that it would not be increasing production and suggested OPEC+ continue with oil production cuts; we can expect a further rise in crude oil prices in the coming months although trade war with China and built in the US crude oil inventory is keeping oil prices under check,” he added.