Shifting sands: How fuel pricing policy evolved over the years

With the finances of state oil companies, led by Indian Oil, careening in a volatile oil world, the question being asked yet again is whether they will now finally get the 'full' freedom to set the prices of diesel, petrol and LPG, or whether the new government at the Centre will continue to 'influence' what you and I pay at the pump.

- S DINAKAR

However, industry and government officials, analysts and state oil companies say that it is unlikely that the price of petrol will be changed daily, based on international prices. But before we try to read the future, it will be instructive to step into the past and study the evolution of India's fuel pricing policy.

India's progress with the decontrol of fuel prices derailed most recently in May 2022 when petrol and diesel rates surged to 121/litre and ₹105/litre respectively in Mumbai, and that may have brought in the government, once again, to step in to 'manage' the oil economy. In the two years since, the needle on fuel prices has barely moved, barring a tax reduction and a surprising fuel price cut executed amid rising prices. The Indian crude oil price basket rose by $5 per barrel between March and April 2024, but instead of prices going up pump rates of petrol and diesel fell by 2 per litre in mid-March.