Lok Sabha Question No. 637 (UNSTARRED), answered on 2024-07-25
Subject: Deregulation of Petrol Prices
Ministry: PETROLEUM AND NATURAL GAS
Asked by: Shri Godam Nagesh

## LOK SABHA UNSTARRED QUESTION NO. 637 TO BE ANSWERED ON 25 JULY, 2024

## Deregulation of Petrol Prices

## 637. SHRI GODAM NAGESH:

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũी

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a) whether the aim of deregulation of petrol prices was to link retail prices of the fuel with the market in the country and if so, the details thereof;
- (b) whether it is useful to the common man and if so, the details thereof;
- (c) the period of time taken to so adjust the prices during the last two years; and
- (d) whether the Brent crude price fell this year and if so, the corresponding reduction in retail prices according to the formula for the purpose and the actual reduction effected, respectively?

## ANSWER

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũालय मŐ राǛ मंũी ( ŵी सुरे श गोपी )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI SURESH GOPI)

(a) to (d): Prices of petrol have been market-determined with effect from 26.06.2010. Since then, Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol.  Market determined pricing is meant to attract higher investments in the fuel retail sector, and by spurring market  competition,  encourage  OMCs  to  reduce  costs,  improves  efficiency and  service standards.  It  also  incentivises  fuel  conservation  and  encourages  the  consumers  to  adopt  fuel efficiency practices. It further helps the Government in allocating more funds for social sector schemes for the common man.

India imports more than 85% of its crude oil requirements. The international prices of crude oil vary  depending  on  various  factors  viz.  demand-supply,  geopolitical  factors  and  other  market conditions. Prices of crude oil relevant to India are monitored through Indian Basket of Crude oil.  Crude  oil  prices  (Indian  basket)  increased  from  $59.35/bbl  (August  2019)  to  $112.87/bbl (March  2022)  and  further  to  $116.01/bbl  (June  2022)  and  have  continued  to  remain  highly volatile. In current year, it fluctuated from $84.49/bbl in March 2024 to $89.46/bbl in April 2024 and to $85.89/bbl in July 2024 (upto 19.07.2024). India has been the only major economy in the world where the prices of petrol and diesel have come down in recent years .

Changes in prices of petrol and diesel in some major economies between November 2021 and April 2024 are as under:

|               | %age Change in Prices between Nov-21 and April-24   | %age Change in Prices between Nov-21 and April-24   |
|---------------|-----------------------------------------------------|-----------------------------------------------------|
| Country       | Petrol                                              | Diesel                                              |
| India (Delhi) | -13.65                                              | -10.97                                              |
| France        | 22.19                                               | 20.17                                               |
| Germany       | 15.28                                               | 16.47                                               |
| Italy         | 14.82                                               | 17.38                                               |
| Spain         | 16.58                                               | 18.14                                               |
| UK            | 5.79                                                | 9.56                                                |
| Canada        | 22.07                                               | 22.24                                               |
| USA           | 19.08                                               | 20.25                                               |

Source: Petroleum Planning and Analysis Cell

Changes in prices of petrol and diesel in some neighbouring economies between November 2021 and April 2024

|               | %age Change in Prices between Nov-21 and April-24   | %age Change in Prices between Nov-21 and April-24   |
|---------------|-----------------------------------------------------|-----------------------------------------------------|
| Country       | Petrol                                              | Diesel                                              |
| India (Delhi) | -13.65                                              | -10.97                                              |
| Pakistan      | 44.98                                               | 43.65                                               |
| Bangladesh    | 22.01                                               | 40.24                                               |
| Sri Lanka     | 75.54                                               | 142.91                                              |
| Nepal         | 31.08                                               | 35.70                                               |

Source: Petroleum Planning and Analysis Cell

Government  of  India  also  took  several  other  steps  to  insulate  common  citizens  from  high international  prices,  which  included  diversifying  the  crude  import  basket,  windfall  taxes  on export of petroleum products, invoking the provisions of Universal Service Obligation to ensure availability of petrol & diesel in domestic market, increasing the blending of ethanol in petrol, etc.

Central  Government  reduced  Central  Excise  duty  by  a  total  of  Rs.  13/litre  on  petrol  in  two tranches in November 2021 and May 2022, which was fully passed on to consumers. Some State Governments also reduced state VAT rates to provide relief to citizens. In March, 2024, OMCs also reduced the retail prices of petrol by Rs. 2 per litre. Current RSP of petrol at Delhi is Rs. 94.72 per litre.