The world is facing an unprecedented crisis, one which has never been witnessed before and hopefully, it won’t witness ever again.
Considering the COVID-19 situation and the lockdown that followed, India’s economy, along with that of several countries, is in a critical state. The world was looking at India with hopeful eyes, thinking that the world’s second-largest country and largest democracy will ace economic growth.
The recovery of India from the first wave of coronavirus was phenomenal, which had given birth to this hope. However, the second wave of COVID-19 hit India like a truck. Several innocent people lost their lives, thanks to the poor state of healthcare and healthcare workers.
The government turned a blind eye to the plight of the Indian population, focusing its efforts on the elections going on in West Bengal.
Amidst this, two important economic events that happened were, firstly, the downfall of India’s economic condition and secondly, the increase in the prices of petrol and diesel.
India was going through a tough phase during April and May 2021, meaning that the COVID-19 peak induced lockdowns and several businesses suffered. It was a natural consequence but, it could have been mitigated had the government taken actions at the right time.
The second economic event, which could have been avoided, was the steep rise in prices of petrol and diesel. Starting from May 1, 2021, which was the time when COVID-19’s second wave was at its peak, petrol prices rose by Rs. 8.41 per litre in the national capital.
A similar rise was witnessed in the prices of diesel, as its prices rose by Rs. 8.45 per litre in the past 60 days in the national capital.
One must also note that back in October 2018, when global crude oil prices were over $80 per barrel, the petrol and diesel prices in India were Rs. 80 per litre. However, right now, when the global crude oil prices are hovering around $75 per barrel, the prices are unprecedently high.
Petrol is priced at Rs. 98.81 per litre and diesel is priced at Rs. 89.18 per litre in Delhi. It is enough to burn a hole in the pocket of the common man who’s still coming to terms with the effects of the COVID-19 induced lockdowns.
Read Also: How Will The Vaccine Boost Economic Growth?
Economic Recovery And Petrol Prices
While the question of inflation remains, experts are worried that the rise in petrol prices might affect the economic recovery of the country.
The economy is already under immense pressure and the increase in prices of petrol and diesel will not only affect those who own a car but even those who don’t.
Wholesale and retail transportation of goods, interstate and intrastate, is very much dependent on petrol and diesel-based vehicles. Most heavy vehicles run on diesel, while other transport modes also use petrol.
An increase in the price of petrol and diesel will consequently increase retail inflation, as the cost of a product also includes the cost of transportation, which is rising almost daily. Essential commodities and services are likely to become costlier, affecting the light pockets of the retail customers.
India is Asia’s second-largest oil importer and several experts think that to meet the demand, the government should reduce oil prices. This is because if the prices keep on increasing, then the demand would fall as per the rules of economics. This would thus affect the revenue of the government that it generates through oil.
A fall in revenue, when the government is coming with new economic recovery schemes each day, is not good. It will hamper the economic growth of India when we are already struggling with the waves of COVID-19.
As experts say, the government should endeavour to reduce oil prices to grease the economic growth of the country.
Image Source: Google Images
Sources: Economic Times, India Today, Times of India
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This post is tagged under: petrol, diesel, economics, economy, economic recovery, economic schemes, COVID-19, coronavirus, oil, crude oil, global crude oil, crude oil prices
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