New Delhi, May 15 (IANS). After petrol and diesel prices increased by Rs 3 per liter on Friday, experts said this increase in fuel prices could accelerate investment in renewable energy and diversified supply chains.
Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings, said the increase in fuel prices will increase transportation and production costs, which may put pressure on inflation and increase prices of essential commodities.
He said, “Economic growth of oil importing countries may slow down, industrial production may weaken and people’s purchasing power may be affected. However, it may accelerate investment in renewable energy, energy conservation and diversified supply chains. Therefore, this crisis has become an economic as well as a strategic challenge.
Sharma said the crisis also highlights the risks of excessive dependence on politically unstable regions for energy supplies.
He said that India imports about 85 percent of its crude oil requirement. In such a situation, it affects foreign exchange reserves and financial stability. Also, due to weakening of rupee, import expenditure may increase further.
At the same time, Jatin Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said that such steps can accelerate the adoption of electric vehicles (EV) in the long run and reduce dependence on imported fuel.
“The rise in fuel prices may lead to short-term inflation and impact transportation and consumption costs. But it also shows the government’s focus on controlling fuel subsidies and protecting foreign exchange reserves amid global uncertainty,” he said.
Apart from this, Ajit Mitra, Senior Vice President, Research Department, Religare Broking Limited, said that at present the availability of fuel remains stable, but the increase in prices may further increase inflationary pressure in the economy.
He said, “Global crude oil prices had increased from around $69 per barrel in February to above $120 per barrel and currently remain around $107. This had increased the pressure on oil marketing companies to increase costs and reduce profits.”
In Delhi, petrol price increased by Rs 3.14 per liter to Rs 97.77, while diesel became costlier by Rs 3.11 per litre.
Amid the West Asia crisis, oil companies have also increased the prices of compressed natural gas (CNG). CNG has become costlier by Rs 2 per kg since Friday. Now its new price in Delhi has become Rs 79.09 per kg.
–IANS
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