Business, Economics and Jobs

India cuts gas prices


A crowd of motor-cyclists queue at a petrol pump to fill their vehicles after the announcement of a 7.50 Indian rupee price hike in petrol by the government in Jodhpur on May 23, 2012. Indian state-run oil firms Wednesday announced the sharpest hike in petrol prices in nearly a decade to offset growing losses caused by subsidised rates, rises in the international oil price and a plunging rupee. The increase was put at 6.28 Indian rupees (11 US cents) per litre which, when taxes are included, will mean a 7.5-rupee hike for consumers in cities such as New Delhi.

Indian oil firms cut gas prices for the second time this month, following an 11 percent hike in May that sparked public protests.

State-run refineries announced the cuts would yesterday, reducing the cost of a liter of gas by 2.46 ($0.04) rupees to 67.78 ($1.19) per liter, reported Reuters. May's increase triggered public outcry and political backlash in a country suffering from high inflation, even though gas is only about 10 percent of India's total fuel consumption.

"It is a very good step for the auto industry. We need much more such steps to reduce the price differential between petrol and diesel," Society of Indian Automobile Manufacturers (SIAM) senior director Sugato Sen told PTI.

More from GlobalPost: India hikes petrol prices to stem rupee's crash, angering citizens

India imports close to 80 percent of its oil and the import bill has risen dramatically because of high global prices and a plunging rupee, according to the New York Daily News. Refiners have complained that they have to incur massive revenue losses because of constraints on keeping their selling prices in line with international prices.

India's government deregulated gas prices in 2010 in an attempt to reduce the immense subsidies it pays to state-run refiners, reported Agence France-Presse. But it still holds significant influence when it comes to gas price changes and has complete control over heavily subsidized costs of diesel, cooking gas and kerosene, which are all used by India's poor.