India fuel price freeze by India’s oil companies as the global crude market surges could dampen inflationary pressures enough to delay an interest rate hike. And might generate significant electoral gains for Prime Minster Narendra Modi, observers said. India fuel price retailers revised prices daily through much of last year. But despite the oil market hitting a seven-year high. They have held them unchanged since early November as well as cutting gasoline and gasoil taxes.
The government and fuel company officials say they want to protect consumers in the world’s third biggest oil importer. “From volatile global oil and refined fuel prices”. The measure not subject to a written government order but nevertheless hurting the oil companies’ profits. The senior officials speaking on condition of anonymity said – also coincides with the run-up to key elections.
Modi’s Bharatiya Janata Party (BJP) is facing voter anger over accelating inflation and job losses suffered during the COVID-19 pandemic ahead of five state ballots next month.
India fuel price retailers revised prices daily through much of last year
How the BJP performs in those elections – notably in Uttar Pradesh. India’s most populous state – will provide a litmus test of Modi’s chances of retaining power in national elections in 2024.
The ruling party gets a clear political advantage as the holding off daily oil price revisions has lowered voters’ anger said Anurag Agarwal. A sports goods manufacturer from Meerut in Uttar Pradesh, and a regional head of the Indian Industries Association. Rahul Mehta, president of the Tourism Welfare Association trade body in Varanasi – in the same state. And Modi’s political constituency – meanwhile called the fuel price freeze an “election bonanza” for citizens.
The main opposition Congress Party has also accused Modi of “politicising” the price of fuel. By failing to pass on in full to consumers a fall in crude oil prices last year. The fuel price freeze, mirrored by many manufacturing firms battling to counter a COVID-induced slump in consumer demand, has also all but put the lid on chances of a February interest rate hike.