The 2019 elections are fast approaching and the Government plans to leave no stone unturned to make the voters happy. According to the latest report published by Bloomberg, the Government has asked oil retailers not to raise diesel and petrol prices, and absorb a part of the losses due to the recent recovery in global crude oil costs. Oil prices have recovered since hitting a low of USD 27.1 per barrel in 2016. Brent crude is currently trading near USD 70 mark.
The report suggest that the Government may not opt for a cut in excise duty on fuel prices due to sluggish revenue collections on the back of the Goods and Services Tax (GST). In fact, the oil ministry has been reportedly asked to prepare subsidy payments in case the crude oil prices rise further.
Leading oil companies would reportedly have to bear losses of upto INR 1 per litre on diesel and petrol. The stock prices of the oil companies were affected and the shares of Indian Oil and HPCL fell by as much as 7.6 per cent and 8.3 per cent respectively on Tuesday.
Oil Minister Dharmendra Pradhan recently said that India wants to see prices at about USD 50 a barrel in order to manage its finances better. India imports more than 80 per cent of its annual crude oil requirement.