On Tuesday, after possibly the longest pause, of 137 days, in India’s retail fuel prices in recent years, oil marketing companies raised petrol and diesel prices by about 80 paise a litre, following up with a similar increase on Wednesday. A ₹50 hike was also effected in domestic cooking gas prices. Fuel prices were last tweaked in November 2021, following the Deepavali-eve cut in petrol and diesel excise duties. The interregnum between then and now, coinciding with the five Assembly election battles, also witnessed the sharpest spike in global crude oil prices among recent instances of price freezes in India’s ‘deregulated’ petroleum products market. From around $73 a barrel on November 4, crude prices are now around $110 after shooting past $130, immediately after Russia’s invasion of Ukraine. Ordinarily, oil marketing companies reset retail prices daily, based on an average of the previous 15 days’ global prices for their preferred basket of crude. The Government has distanced itself from fuel pricing decisions, asserting there was no official directive to keep prices down. There is no evidence that oil firms had built up such large strategic reserves at earlier prices that they did not need to react to an over 50% cost surge for a commodity whose demand is met largely through imports. That price hikes, in small doses, have begun only after government formation in poll-bound States, makes it abundantly clear that a nudge and a wink from the majority owner of the state-run oil players had goaded them into swallowing higher costs, compelling private players to follow suit to compete.
Holding free market prices hostage to electoral politics, deployed ever so often in recent years, including the last time these five States went to the polls and the 2019 Lok Sabha campaign, is politically unfair, economically untenable and reflects an extremely cynical state machinery deployment tactic. That bulk diesel prices have been raised by ₹25 per litre to ₹122, indicates that several more hikes are in the offing to close the gap between costs and pump prices. Inflation, already above the comfort level, may rise further and the Government may intervene with more duty cuts at some point. But there are larger red flags to fret about. No sane global investor will bid for Bharat Petroleum Corporation Limited, for instance, if pricing freedom is effectively curtailed after an Election Commission of India (ECI) briefing. This practice warrants wider consternation, not only because it undermines a level-playing electoral field in favour of the ruling dispensation but also opens the door for more such creeping diktats or deviations from policy positions for temporary gains in voter perceptions. Just as mysterious fuel pricing decisions have become par for the course, other transient departures from stated policy can also become governance habits. While governments are obviously tempted to create optics of benevolence towards the common voter, the ECI needs to rise up to take a firm stand on reversals or deferrals of routine decisions in poll season.
