Petrol & Diesel Prices Set To Rise? Experts Say Govt Has “No Choice” | India’s Oil Crisis Explained

Added: 2026-05-14

[00:00:00]Do I need?

[00:00:11]Well, the other side of the story, oil, and who better than MK Surana, former CMD at HPCL, and Kirit Parikh, former member at the Planning Commission and oil and gas expert, joining in on the show to talk about exactly that. Uh sirs, both of you, thank you so much for your time today. Mr. Surana, if I could start off the discussion with you, the OMC under recovery, do you think this is going to be uh this is going to turn out to be a big concern as uh you know, sort of flagged off by the petroleum minister himself yesterday?

[00:00:41]Yeah, good morning uh to you. Uh yeah, that's correct. The under recovery of the OMC is a big concern, and day by day it is becoming a bigger concern.

[00:00:50]And that is on the back of the fact that probably the market is still not fully factoring in factoring in the problem which which we have on the crude market.

[00:01:00]It may be probably there is a lesser demand from China currently by around 2 million barrels lost in April, or maybe because the surplus inventories and the floating inventory on the sea and the release from the SPRs have taken care to some extent.

[00:01:16]But if you are having around 10 million barrels a day outage from the market and going on for around 75 days and not yet any solution in the mind.

[00:01:26]And the oil marketing companies not able to recover even the cost of the crude, it is a big concern, and the distress will increase day by day.

[00:01:36]Parikh, although the government has been very vocal in saying that, you know, it's a fallacy or misconception um that uh oil prices are going to be in crude increased anytime soon, but do you think there is no option and we will see um you know, retail fuel prices go up?

[00:01:55]See, the distress on the oil marketing companies have to be taken care of.

[00:02:00]There is no doubt about it. Now, whether we do it by passing on some of the price hike to the consumers or we do by finding some other mechanism to compensate.

[00:02:09]Now, a part of the excise duty was reduced sometime back. Now, what are the other options with the government? That is to be seen, but there's no denial that price hike is one of the options and at some point of time it will be inevitable.

[00:02:25]What is your own analysis on how much can the government actually hold on to passing on to the fuel price hike on to retail?

[00:02:37]It It should have been done earlier. Mr. Parikh, my question is to you. Mr. Surana, I'll just come back to you. I just want to get Mr. Parikh as well in.

[00:02:47]Yes, Mr. Parikh.

[00:02:52]Shall I answer this? Yes, please.

[00:02:56]Hello. I I think uh the government may say that this has nothing to do with elections.

[00:03:02]One could sort of trust them in some sense and say that okay, uh they were expecting that the Iran war will hold in a month or two and that oil market would come back to normal and therefore they didn't want to raise the prices.

[00:03:20]But now it seems this war is going to go on for some months and then uh the the losses the oil marketing companies are facing are significant and therefore I think uh the government has no choice but to raise prices in my opinion.

[00:03:37]And if you you can ask people to reduce consumption, but the only effective way to make them reduce consumption is to raise prices.

[00:03:46]And surely uh uh all the public vehicles which are being used, all the government use of public transport will go down. Uh but uh how long will that remain uh low consumption is a question of of of of uh you know is a question questionable thing.

[00:04:11]Because what happens generally is that people get used to thing and then high price and so on or something like that and then begin to uh go back to their own old old old methods and and and and so on. And therefore, I think it is an uh it is unavoidable that the prices have to rise.

[00:04:38]Uh Mr. Parikh, by how much? Really, that's the golden question, right?

[00:04:43]Yeah, I you know, I sure it won't go back to the same level as before.

[00:04:48]Uh This will be This will be increased gradually not at one go.

[00:04:54]Uh uh because I think uh uh government wants to minimize the impact on on on inflation and other things. So, my feeling is that it will go by maybe 5% uh uh at a time and so on.

[00:05:13]But it has to increase you know, the cost of these have gone up by nearly uh uh 60-70% So, you cannot really increase the price by 60% all at once.

[00:05:26]Uh but you can go gradually and say, "Okay, I will increase by 2 rupees, 3 rupees per month and so on.

[00:05:35]And you can go on go ahead like that."

[00:05:39]Rana, your take with regard to the quantum of the increase, what's your sense? Uh I mean I'm sure that while the government has one eye on the losses that that are being generated, 1,000 crore a day is the understanding, but the other eye is also on inflation and and and the macro impact.

[00:06:04]You see prices have gone up.

[00:06:08]Our rupee has depreciated significantly.

[00:06:11]Yes. So, the impact on inflation is going to be there.

[00:06:15]Whether you like it or The only way we can we can really significantly reduce this impact is by cutting down our consumption of oil.

[00:06:26]Now, saying that is very easy to cut down the consumption of oil. But, how would you do this? You have to recognize what are the options which are really available.

[00:06:36]If you say that, "Look, I want to cut down the consumption of petrol."

[00:06:41]You ask people to you know, pull the cars and then go and and and use public transport. Now, people would use public transport, I think, as long as it is cheaper and doesn't take much more time than what private transport is. If it takes me 1 hour to go by public transport to my office and by car it takes me 10 minutes or 15 minutes, then you know, how long would I keep using public transport is a big question.

[00:07:14]And I really do think indeed that this is public transport has to be You really must invest in it and make it certain that it is almost equal and competitive in terms of time and cost with other motor vehicles.

[00:07:32]Then people certainly do. I mean, in New York, for example, if you see New York City, everybody uses public transport because it's available and you don't have to do much effort, but it takes me just the same time as I have going by taxi and so on and so on. So, I think unless you make public transport that was attractive, people won't go for this.

[00:07:57]So, that's one way.

[00:07:59]Now, consider the diesel.

[00:08:00]Let me take Mr. Surana's view on this as well. Mr. Surana, give us a sense.

[00:08:06]Of course, as I did mention, government will have I have one eye on the macros as well when they are when they're trying to rejig the price of retail fuel. What's your sense? What's the percentage hike likely to be given that they have to balance both of those?

[00:08:24]See, while at one end we can say it is difficult to increase it at the time, but at the same time, if we do not increase it substantially, then every day passing that the under-recovery pool will increase.

[00:08:37]And therefore, in my opinion, initially a bigger hike will be required, may not be 100% and then maybe gradually increased in partial amounts.

[00:08:49]But, the second part is that consumption part is a is a right call from the Prime Minister because there are two type of consumption. One is a discretionary and one is essential. So, while going to office, people will have hurry, they may not, but let's say the people go to drop the children to the school, it is nearby the bus, but still they take the car because that is the way it is. Or just you're going to buy the vegetables from the market and still you take the car. So, there are discretionary things also. Probably, at least it will give an alarm bell in the mind of the people to contain that. And the second part is like the gold, silver. The last year, the increase in the gold import import was almost 25%.

[00:09:28]The silver import was more than 100%.

[00:09:31]So, this call on the consumption is aimed at from a short-term measure a well as a long-term measure and at least give an alarm bell ringing in the mind of the people at least to think. As far as the fuel is concerned, I think it has to work on all the front.

[00:09:46]The consumption, the use, the efficiencies, the the repurposing of the molecules, all thing has to be attacked together to to ensure that we we get the the most optimum uh output from each molecule of crude which we are import.

[00:10:03]Mr. Surana, uh the government is pegging 30,000 crores losses on a monthly basis for OMCs.

[00:10:11]Uh at the same time, you saw yesterday the royalty rates for upstream companies were reduced.

[00:10:17]Uh do you see uh this losses of 30,000 crores will now be borne by uh the upstream companies as well going forward?

[00:10:28]See, I think the reduction in the royalty rate may be a longer-term item which could have been under work, and so we should not be confusing with the immediate measure with the long-term measures.

[00:10:38]But, in the past, the upstream companies have shared a part of the burden.

[00:10:43]Now, we have to agree that it cannot happen that one part of the sector earns the profit, and other uh part of the sector uh assumes losses.

[00:10:53]Now, the government has to work on it, especially considering that MS and HSD were basically decontrolled items.

[00:11:00]But, on the LPG, which is a controlled item, definitely compensation, there is a mechanism to do that.

[00:11:06]I think there are some more ways innovating there has to be thought of uh to to ensure that the OMC remain in the green of the health.

[00:11:17]Mhm. Right. Okay. Uh Mr. Parekh, Mr. Surana, both of you, thank you so much for your time today and giving us that insight.

[00:11:25]Thank you. Thank you so much.

[00:11:27]Okay, let's take a very quick break on that note. Slightly stable for the market, so it seems that that massive correction which played out the last 2 days, that definitely [music] has stalled. And now to the gains. We'll take a very quick break. Be right back with more.

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