New Delhi: As the 2024 general elections approach, the Modi government may slash petrol and diesel prices by up to ₹10 per litre next month. The move could bring some respite to the consumers and rein in inflation, but it also raises questions about the political motives behind the fuel price changes. The report said that the oil companies are expected to make a record profit of ₹75,000 crore in the third quarter, despite the decline in crude oil costs. The profit margin is attributed to the high taxes and duties levied on fuel by the central and state governments, which account for more than half of the retail price.
The oil companies are considering passing on some of the benefits to the consumers by cutting the fuel prices by ₹10 per litre, which would still leave them with a comfortable profit margin. The move could also help ease the inflationary pressure, which has been rising due to the high fuel prices.
Fuel Prices, Election Cycles
However, the timing of the proposed price cut also coincides with the upcoming general elections in 2024, which could be seen as a political strategy to woo the voters. Data shows that fuel prices have been manipulated in the past to suit the electoral interests of the ruling parties.
For instance, before the assembly elections in Arunachal Pradesh, Andhra Pradesh and Sikkim in April 2019, prices were kept unchanged for just five days. But before the Bihar elections in November 2020, prices were kept unchanged for 51 days. Similarly, before the West Bengal elections in 2021, prices were kept unchanged for 31 days.
The trend continued this year, as prices were kept unchanged for four months before the five assembly elections (Uttar Pradesh, Goa, Manipur, Punjab, and Uttarakhand) in February-March 2022. The revision of prices resumed just two weeks after the elections were over.
The most recent example is the Gujarat elections, which concluded on 5 December. The fuel prices were kept unchanged for more than eight months before the last day of voting. It is yet to be seen how long the prices will remain unchanged now that the elections are over.
A Delhi-based economist questioned the rationale behind the price changes, saying that the issue was not about providing relief to the consumers, but about influencing the voters. “The pattern of price changes makes it clear that the focus is elections and on influencing voters,” he said.
What Do The Past Trends Say?
This is not the first time that the state-owned oil companies have frozen or moderated the fuel prices during election times. Industry sources said that they had done so in the past as well, under the pressure from the government.
For example, they took a 19-day price freeze on petrol and diesel ahead of the Karnataka polls in May 2018, despite the rise in international fuel prices. But as soon as the elections were over, they passed on the desired increase to the customers, raising the petrol price by Rs 3.8 per litre and diesel by Rs 3.38 in 16 days.
They also stopped revising fuel prices for almost 14 days before the Gujarat elections in December 2017. They also imposed a freeze on petrol and diesel prices between January 16, 2017, and April 1, 2017, when assembly elections in five states, Punjab, Goa, Uttarakhand, Uttar Pradesh and Manipur were held.
