Poll effect? No change in Petrol, diesel prices for 69 days

Highlights

Petrol and diesel are deregulated in India, which means they are linked to market rates
Decision to keep prices stagnant coincides with electioneering hitting a peak in poll-bound states
Petrol, diesel prices were last changed on Nov 4, 2021, when the Centre cut excise duty

Petrol and diesel prices have remained unchanged for 69 days in a row despite a swing in international oil prices and global rates again climbing to USD 84 per barrel. This coincides with electioneering hitting a peak in poll-bound Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur. Barring Punjab, the BJP is the ruling party in the four states.

Petrol and diesel prices were last changed on November 4, 2021, when the Centre cut excise duty to give relief from rates that had touched an all-time high. On November 4, 2021, excise duty on diesel was cut by Rs 10 a litre and that on petrol by Rs 5 per litre, resulting in an equivalent reduction in retail pump rates. On that day, some states, mostly ruled by the BJP, cut local sales tax or VAT to give larger relief to consumers. Other states like Punjab and Delhi followed suit at later dates but the base price of petrol and diesel has remained unchanged since November 4, 2021.

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Before the excise duty cut, petrol and diesel prices had touched an all-time high across the country. While petrol had crossed the Rs 100 a litre mark in most cities, diesel was above that level in nearly half the country. In Delhi, petrol came for Rs 110.04 a litre and diesel for Rs 98.42. The government faced a lot of criticism because of the rising pricing then. In weeks and months leading to record rates, it resisted cutting taxes but had to do that with elections scheduled in five states. West Bengal, Assam, Tamil Nadu, Puducherry and Kerala,

After the excise duty cut, petrol now costs Rs 95.41 a litre in Delhi and diesel Rs 86.67 per litre.

Notably, the latest decision to keep the prices unchanged is the longest duration of no-change in prices since the daily price revision was introduced in June 2017. Prior to that, there was an 82-day hiatus in rate revision between March 17, 2020, and June 6, 2020. At that time, polls were due to be held in West Bengal, Assam, Tamil Nadu, Puducherry and Kerala.

This time again, fuel prices are stagnant despite a wild swing in international oil prices, triggering talks that rates are not being revised due to elections and oil marketing companies will start increasing fuel prices after the election results are announced. The elections in the five states will be held between February 10 and March 7. The results will be announced on March 10.

It is worth mentioning that the oil companies had from May 4, 2021, two days after the counting of votes in West Bengal, Assam, Tamil Nadu, Puducherry and Kerala, had started increasing petrol and diesel prices, giving ammunition to the Opposition parties to attack the Modi government. Although the BJP failed to dethrone Mamata Banerjee from West Bengal, the party made inroads in the eastern state, becoming the principal Opposition party.

This time, the Bharatiya Janata Party has pinned hopes on retaining power in the politically crucial state of Uttar Pradesh which has 80 Lok Sabha seats, the highest in any state in the country. Assembly results in Uttar Pradesh could play a role in the BJP's bid in 2024 when the saffron party will seek to win the general election third time in a row.

Likewise, there was a 19-day price freeze on petrol and diesel ahead of Karnataka polls in May 2018, despite international fuel prices going up. However, no sooner were the elections over, the price was increased. Petrol price climbed by Rs 3.8 per litre and diesel by Rs 3.38 per litre in just 15 days.

Similarly, fuel prices were not revised for almost 14 days ahead of the assembly elections in Gujarat in December 2017. Petrol and diesel prices were frozen again between January 16, 2017, and April 1, 2017, when assembly elections in five states — Punjab, Goa, Uttarakhand, Uttar Pradesh and Manipur.

During the 2019 general elections, oil companies moderated the revision by not passing on all of the desired increase in rates to consumers. However, the rates began to rise a day after the final phase of polling for the Lok Sabha elections ended.