Will petrol, diesel prices in India come down significantly in two months? JPMorgan responds

NEW DELHI: Will petrol and diesel prices fall sharply next year? The US Energy Information Administration predict crude oil prices to come down to $52 per barrel by 2026. Currently, crude oil prices are at $65 per barrel. Another financial institution, JP Morgan, also estimates that prices will fall from next year for various reasons. They say that it will fall to $58. Oil prices, which have been fluctuating frequently, have remained unchanged for more than a year.

If the prediction ends up true, the biggest relief will be palpable in India. The country spends crores to import 90 per cent of the crude oil for consumption. The current solace has been getting oil from Russia at a cheap price. The cost of imports has reduced accordingly. With the reduction in oil prices next year, the foreign exchange earnings of oil companies will improve significantly.

It is to be seen whether the government will be willing to pass on the benefit to consumers if the price of crude falls as predicted. Last April, the centre increased the excise duty on petrol and diesel by Rs 2 per litre. But the burden of this was not imposed on the people. Instead, the oil companies themselves bore the burden of the tax increase. But it is doubtful whether the companies will be willing to bear it again. Amidst facing revenue losses, those companies will not again give consent to take the risk. Since assembly elections are due in many states, including Kerala, many believe the centre to not take the risk of putting the tax burden on people.

Economists predict huge benefits for the NDA front and the people if the government brings down the oil prices. With the reduction in oil prices, the prices of essential commodities will plummet significantly. The prices of many goods have already come down due to the reduction in GST. Along with the reduction in prices, transportation costs and inflation will also come down. With this, the trade deficit and fiscal deficit will drop to the safe zone. Consumption will increase, and so the GDP figures.