Era of cheap fuel over, profit margins could be hit: Assocham

New Delhi, June 12 (IANS) With international oil prices climbing back to over $50 levels, driving around on cheap fuel seems to be a thing of the past though there is no danger of “hard times” as yet, Assocham said on Sunday.

“The party time on driving around on cheap fuel seems to be over, though there is no danger of hard times as yet even though the automobile fuel has witnessed about 20 per cent increase in the recent past,” the industry chamber said on the basis of a recent study.

“While the crude oil prices have shot up by about 20 per cent in the last few months, the auto fuel prices at the filling stations have increased between 12-18 per cent in different cities, depending on the state levies,” said the Associated Chamber of Commerce and Industry of India.

“A sharp increase in the retail prices of automobile fuel, particularly diesel, will have a cascading impact on the prices of a large number of consumer items, building the inflationary pressure and making the task of the Reserve Bank of India difficult in moderating the interest rates,” it added.

Noting the price of petrol in Delhi this year has touched Rs 63.20 per litre in June from Rs 56.61 in March, Assocham secretary general D.S. Rawat, while releasing the paper, said: “If the crude oil prices further go up, the government should seriously think of rolling back the duties imposed when the prices touched rock bottom.”

“The crude prices shot up from $25 to $50 per barrel in the last six months on the back of pick-up in demand from China, India and reduction in stockpiles in the US.

“If the trends of rising prices continue, the profit margins could be hit since the corporate India is not in a position to pass on the rising raw material cost to the consumers even among the industrialised goods,” he added.

As per the available official data, the Indian basket of crude oils inched further up, closing on Thursday at $49.35, over its closure at $48.91 the previous trading day.



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