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N.K.Assumi (Advocate)     15 May 2011

Reasons for the raise of petrol price by Rs.5 /-

What is the reasons for the increase of price of petrol by Rs.5/-? Any special reasons?


 11 Replies

Shiv (Officer)     15 May 2011



  1. तेल कंपनियों का कहना है कि अंतरराष्ट्रीय स्तर पर कच्चे तेल की क़ीमतों में हुई भारी बढ़ोत्तरी की वजह से पेट्रोल का दाम बढ़ाना पड़ा है.
  2. भारत सरकार ने जून, 2009 में सरकार ने पेट्रोल की क़ीमतों पर से सरकारी नियंत्रण को ख़त्म कर दिया था और इसे तेल कंपनियों पर छोड़ दिया था कि वे कच्चे तेल की क़ीमतों के आधार पर पेट्रोलियम पदार्थों की क़ीमतें तय करें.
  3. इस समय अंतरराष्ट्रीय बाज़ार में कच्चे तेल की क़ीमत 110 डॉलर प्रति बैरल से भी अधिक हो गई है.

hema (law officer)     15 May 2011

On the face of it, shivji's reply appears to be correct and as and when there will be enhancement of crude oil prices in international market, the price will rise.  but there are hidden politics in this game.

First, in international market crude oil prices fluctuate for different reasons.  some times, actually, they go down.  but you never see that petrol and other connected commodities prices go down in domestic market.  At that time, the government says that to meet the future enhancements, we are not reducing the prices.

now, for example, in the international market, if prices of crude oil increases for Rs.1 per litre (though they calculate it in dollars and the quantity is in barrels), the increase of Rs.1.25 in our country is justified as there would be transportation expenses and crude oil processing expenses.  But, the prices rise to level of Rs. 5/- or more.  Why?  Because, the central government earns billions of rupees by imposing  import duty when it is off loaded from abroad.  Then, when it comes out of refineries in consumable form, it imposes excise duty and other duties and at the end of supply line, it is said that sales tax also be levied, which would be covered from the consumer.  Even  all the state governments earn huge taxes on this product by imposing various duties at state level.

so, once crude oil rates increase at international level, even though common man  is heavily budened, the governments get opportunity to earn huge amounts.  To avoid criticism, the government says, it is giving subsidy in LPG, kerosene and some times on diesel, which are poor men's commodities.  but here also, the government is playing fraud.  Here also, first impose heavy duties on these three items and reduce them to some extent and say it is subsidy.  Taking into consideration of crude oil prices  rates at international market, even the diesel, LPG, and kerosene are sold at domestic markets at higher rate.

Now, all the oil companies are government companies and we have to purchase it from this company or from that company.  Then what is the necessity for them to spend thousands of crores of rupees on advertisements and sponsor international cricket matches and IPL games?  some corrupt babu log and politicians, oil companies are milching cows.

One more strange thing.  One of of the ambani brothers was given licence to extract oil from Godavari basin.  he was given huge subsidies to acquire this project and nationalised banks gave huge loans to him for this project.  now he is extracting huge quantities of oil and bi-products. but he refused to sell the final product to domestic market and sells it in international market at cheaper rates, where as we poor indians are purchasing the same product imported from international market at higher rate.  the government stands as a mute spectator.  it is other thing that both the national parties and some prominent regional parties are regularly getting party funds from these corporate houses. 


2 Like

Raju Ramparag Gupta (Advocate)     19 May 2011

very detailed answer by Hema hi, nice to read the answer.

The reason for increasing is only to get more and more revenue and nothing else.

yes, this may be one of the reason that in international market the rates of crude oil increasing.

but the central government can also reduce taxes and eventually it will decrease the price of oils but they do not want to.

Arup (UNEMPLOYED)     19 May 2011

how we will come to know what is the price of crude oil?

Arup (UNEMPLOYED)     19 May 2011

My personal experience :-

the day on which price of petrol hiked rs 5/- the auto rickshwa charged rs 5/- per pessanger.

an auto rickshaw allowed to carry 3 persons, but it carries 7 to 9 person.

Democratic Indian (n/a)     20 May 2011

Originally posted by :Arup
how we will come to know what is the price of crude oil?

You can come to know about crude oil prices from commodities exchanges, there are many around the world. In India these are the following:


You can also search in for "crude oil prices". It will give you many results.

1 Like

Arup (UNEMPLOYED)     20 May 2011

it is very clear to us that political perties only care and fear the election, where from they collect the mandates. therefore the central and state election should be happen every year.

Arup (UNEMPLOYED)     20 May 2011

this is the only way to keep the stearing in the hand of the people.

Democratic Indian (n/a)     20 May 2011

Holding elections every year is not desirable as costs to conduct elections will be to high for government to bear. Electorate rather than going by political slogans emotionally, needs to become mature to understand how economy runs and limitations of government. Inflation cannot be eliminated completely. It is caused due to many factors like price of oil in international market, how much extra money government is printing and sending for circulation, agricultral production, population increase causing pressure on agriculture production, agricultural land, housing, transpotation, health care and all other facilities. Basically inflation is demand supply equation.


Subsidies are not a solution to control inflation. Rather they are to fool people. If government gives subsidy, from where does government get money to give subsidy? Subsidy is indirect taxation on common man. To finance subsidies government prints more paper money that causes inflation. Who has to suffer by subsidies? Common man because he has to pay more to get various other goods and services. 

Sarvesh Kumar Sharma Advocate (Advocacy)     21 May 2011

Sir Deasel or Gas can fall down the goverment

that's why  petrol rate becme high!

1 Like

Dipangkar (Business)     14 June 2011

1 Like

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