Petrol Price Hiked at Wrong Time?

Sensing the repercussions that repeated hike in petrol price could have on the country's already inflated economy, people from all quarters have raised concern over the decision of the oil companies to hike petrol price by Rs. 1.82 per litre.

The UPA government has clarified time and again that they have no say in the price of petrol, as it was liberalised last year, but that didn't stop politicians from both opposition parties and allies of the ruling Congress party from criticising the move.

The government do have a reason for liberalising the price of petrol, as subsidy ate up a chunk of the government's exchequer in the past. Sadly, inflation rate has been hovering over 9 percent despite the RBI trying to stabilise it by hiking interest rate 13 times since March 2010.

However, the public seems to be tired of the ever-raising cost of essential commodities. And increase in oil price could worsen inflation further, as the cost of fuel indirectly influences the price of commodities due to increase in transportation cost. This way, common man will be at the receiving end.

Oil companies argue that it is inevitable to hike the price of petrol again (fourth time this year), as they have been incurring loss for too long. Of course one can't sell any product at a loss, but taking up any move that could worsen inflation at this juncture is like adding fuel to the fire.

Maybe the reaction of the public will be milder if inflation falls to a reasonable level. Maybe price of petrol is hiked at a wrong time!