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Domestic petrol and diesel rates are directly benchmarked against international crude oil prices, and with oil prices soaring in the last two months, state-owned fuel retailers needed a price hike just to break even.

Now, with petrol and diesel prices increasing by Rs 10 per litre over 14 revisions since March 22, sources told CNBC-TV18 that "sustained fuel price hikes may not be needed if crude prices stabilise at current levels".

According to the sources cited by the channel, the current domestic retail fuel prices are benchmarked to international crude oil at $95 per barrel. With the last week's Brent crude oil prices at not more than $100 per barrel, the sources indicated that domestic fuel prices could again be put on a freeze for some time.

At the same time, they also stated that oil marketing companies (OMCs) may still recover about a month's worth of losses.

"Approximately one month more of losses may still be recoverable by OMCs," said the sources.

According to the report, OMCs made gains till January end and the gains balanced out in February. It is further said that though discussions have been held about a central excise duty relief, a decision has not been taken yet.

It is said that Rs 5 per litre excise cut on petrol and diesel will cost Rs 70,000 crore revenue loss at this stage for the government.

The last time when the central government cut excise duty of Rs 5 a litre on petrol and Rs 10 a litre on diesel and many states also reduced state tax, there had been a freeze on fuel prices from November 3, 2021, to March 22, despite the spike in international crude oil prices.

The domestic rates of petrol and diesel have remained steady for the sixth day in a row on April 12.

On a daily basis, OMCs adjust the price of petrol and diesel depending on the average price of benchmark fuel in the worldwide market over the previous 15 days and foreign exchange rates. Every day at 6 am, any changes in petrol and diesel prices take effect.

Here is how petrol and diesel prices are calculated in India. Also, know how much of it is tax.

Also Read: RBI Governor Shaktikanta Das forecasts crude oil price will be at $100 per barrel in FY23

On March 24, Moody's Investors Service estimated that India's fuel retailers IOCL, BPCL and HPCL have together lost around $2.25 billion or Rs 19,000 crore in revenue in the November 2021 to March 2022 period after they kept petrol and diesel prices unchanged despite a sharp rise in crude oil prices.

JP Morgan in its report said for OMCs to revert to normalised marketing margins, retail prices need to increase by Rs 9 a litre or 10 percent.

At last week’s monetary review, the monetary policy committee (MPC) jolted the rate environment by resetting the policy priorities to inflation before growth, an oblique increase in the reverse repo rate, and an open field for future policy actions as befits a highly uncertain price environment.

None of this was anticipated. The punch was forceful and the bond market reacted to that as well as what had been expected, viz., forecast revisions that now see inflation 120-basis points higher at 5.7 percent in FY23, and real GDP slower by 60-basis points at 7.2 percent, and a modified stance “…to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth”.

The message was reinforced at the post-policy conference by the RBI Governor specifically underlining the raised inflationary risks and rearrangement of policy priorities. The bond market responded breathtakingly with the 10-year (6.54 percent) benchmark yield jumping 19-basis points to 7.12 percent, increasing more since this week.

Markets and analysts hadn’t expected any action despite the RBI’s communication in preceding weeks about forecast revisions in the April review owing to developments associated with the Russia-Ukraine war; or the government’s steady and daily pass-on to retail-level the prices of all fuels. They were focused upon what the MPC would signal about the future policy course and its normalisation. In part this was because of the past assurance that changes would be ‘well-telegraphed’ in advance. Partly, this was because beliefs about the tolerance of a higher-for-longer inflation by a pro-growth RBI in an environment of fiscal dominance had crept in.

All that is now past. Supply or demand, good or bad inflation, it figures prominently in the policy trade-off. This has been well-telegraphed although many may argue the gear shift, sudden as it is and the heavy-duty impact it has had upon markets and the environment, was anything but. The strangely-worded stance – remaining accommodative while focusing on withdrawal of accommodation – indicates conditions will be less ultra-easy, as elaborated at the post-policy conference.

RBI Deputy Governor Michael Patra said that the movement towards a positive real policy rate has begun, although it’s presently unclear what this might be, and adding that for India’s stage of development, this needs to be positive. As to the distance to positive real rate territory, this is uncertain; at best, speculation with plenty depending upon the evolution of commodity prices.

The central bank made it clear — in forward guidance as it were — that it is ‘ready to take whatever action is required’ and will act ‘as per the emerging situation’, and ‘will be nimble’. Entirely in line with the enlarged uncertainties embedded in the fan charts of RBI’s latest inflation projections, this indicates monetary actions are bespoke than smooth or pre-guided adjustments. It also fits into the multiple challenges posed by an exceptionally uncertain environment with diverse risks: geopolitical, the US monetary tightening, and QT in place of QE (quantitative tightening instead of easing), slowing world demand and possible recession, domestic inflation and slowing growth, the pressure of large government borrowings, among some. It allows balancing of possibly competing policy demands or claims at any point of time in the forthcoming months ahead.

This is also buttressed by the RBI’s fortification of its toolkit — it has substituted the reverse repo rate (this remains unadjusted but, on the instruments menu) with an uncollateralised standing deposit facility (SDF) as the LAF floor; at 3.75 percent, this restores the corridor to 50-basis points, the pre-pandemic level, and is an operative increase of 40-basis points to remove overnight liquidity.

Since monetary actions are conditional upon the inflation readings, this obviously puts the spotlight on the incoming data. In particular, the impact of the fuel prices’ pass-throughs, direct and indirect, will be cumulatively visible in the present quarter’s CPI inflation, where the projected central tendency is currently 6.3 percent.

If exceeded, could a policy rate hike follow on its heels? Or would a changeover to ‘neutral’ stance come first? The RBI has communicated in advance that if inflation surprises on the upside, it will act. No surprise there.

Renu Kohli is a New Delhi-based macroeconomist. Views are personal, and do not represent the stand of this publication.

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The country’s fuel demand soared 4.2 per cent to a three-year high in March as petrol and diesel consumption rose above pre-pandemic levels, according to official data released on Monday.

Total petroleum product consumption in March stood at 19.41 million tonnes, the highest since March 2019, data from the Petroleum Planning and Analysis Cell of the oil ministry showed.

As the economy continued to rebound from the deep impact of the third wave of the COVID-19 pandemic, demand for transport fuel rose in March.

Diesel, the most used fuel in the country accounting for almost 40 per cent of all petroleum product consumption, saw the demand rising by 6.7 per cent to 7.7 million tonnes.

Petrol sales, which crossed the pre-Covid levels a few months ago, were up 6.1 per cent at 2.91 million tonnes.

India is no doubt committed to net-zero energy policy, but at the same time electricity needs of a growing economy in a warming climate makes it fall back time and again on the fuel over which it has a greater control 

Coal India Limited ended the last financial year with a bumper record-breaking production. At about 623 million tonnes, the production in FY22 was 2.6 percent higher than the earlier high of 607 million tonnes in FY19.

Yet, as summer kicks-in, we stare at the possibility of not having enough coal to power our fans and air-conditioners. Businesses are possibly the worst-hit and are already returning to the old ways of using diesel generators for backup supply.

This time around the shortage of coal looks more pronounced and supposedly to be prolonged than what was observed in October. That is because increasing temperatures due to summer season is resulting in stronger demand for electricity. At the same time war in Europe has put pressure on already high prices of imported coal.

Almost all parts of India are seeing a surge in peak power demand, and experts project an all-India peak in the range of 215-220 GW over next few months. The coal ministry is working towards scaling-up targeted domestic production required to meet the coming monsoon season demand. All this while the share of imported coal has gradually gone down, first due to change in import country policies, and, more recently, on account of fresh demand from European Union as a result of the Russia-Ukraine war.

Keeping aside the macro-economic and geopolitical factors, one thing that is clear is that India is still far away from declaring its independence from coal. The country is no doubt committed to net-zero energy policy, but at the same time electricity needs of a growing economy in a warming climate makes it fall back time and again on the fuel over which it has a greater control.

That leads to the question as to when will coal peak in India?

The answer to this is not only of special interest to the worldwide community of Climate Change scientists and energy transition investors, but more crucial to Coal India Limited (CIL) and its shareholders, primarily the Government of India. Even more so to the coal-rich states and communities who have to chart their future in an uncertain risk of energy transition impacting their economy and livelihood.

CIL is still not close to its own set target of 1,000 million tonnes of yearly production, which it had aimed to achieve by 2020. In the meanwhile, the Economic Survey of India 2021-22 has projected coal demand in the range of 1,300 to 1,500 million tonnes by 2030. Given the clues of strong persistent demand and the flak CIL has received for falling short of demand, the miner has identified employee productivity and evacuation infrastructure as the focus areas in the short-term.

Although employee productivity has nearly doubled from 1,263 tonnes per man per year in 2013 to 2,032 tonnes per man per year in 2021, the output is quite diverse across its seven subsidiaries, and planning is underway to close down unviable mines in a phased manner. In order to boost production, the company has cleared 16 coal mining projects with a cumulative additional output expected at 100 million tonnes per year. Further the ministry of coal, and the ministry of railways are jointly working on the evacuation infrastructure required to connect mines with coastal power plants which are supposedly shifting from imported coal to domestic coal.

All these efforts require significant capital investments, funding of which is another cause of concern. Given the already increased energy prices and inflationary pressure on the economy, any headroom for increase in domestic coal price is limited. To add to the financial pressure, India’s power distribution companies are in a bad shape and their inability to pay for power purchase impacts everyone in the value-chain, including CIL. As of end FY22, the gross debtors of CIL and its subsidiaries totals Rs 153 billion.

To top it all new financing for expansion of coal mines and allied infrastructure is getting tough with banks and financial institutions signalling to move away from fossil fuel investments. That will impact financial closure for bidders who wish to participate in commercial coal auctions, and as mine developer and operator (MDO) for domestic mines.

Nevertheless, none of these would mean that India can slow down on its coal consumption just yet. The insatiable demand for energy is too large, and there are still returns available in the mining and extraction of coal as well as from operations of thermal power plants.

For the government it means managing the situation in the short to medium term while not taking its eyes off the already committed long term energy transition goals. That would require focused attention on increasing mines productivity, efficiency in the coal supply chain on one hand, and a continued support in the form of incentives for solar module manufacturing and alternatives such as hydrogen on the other hand.

In short, trying all options at disposal to keep fuelling the economy’s engine, while not losing focus on energy security and independence.

For the million-dollar question of when will coal peak in India — let’s just say not so soon as many may like or wish to believe.

Rasika Athawale is Founder, India Energy Insights. Views are personal, and do not represent the stand of this publicatio

Tata Group is preparing itself to take on established giants such as Amazon and Flipkart in the Ecommerce space.

Tata Sons has invested Rs 5,882 crore in its ecommerce company Tata Digital. This is the most the Tatas have invested in ecommerce in any single fiscal year.

The additional funding takes overall investment into Tata Digital in 2021-22 to Rs 11,872 crore, reported The Economic Times, citing regulatory filings of Tata Group.

According to the publication, in filings to the Registrar of Companies (RoC), it is mentioned that the board of Tata Digital on March 30 approved the allotment of 5.88 billion fully paid-up equity shares of Rs 10 each on a rights basis, aggregating to Rs 5,882 crore, to Tata Sons, the holding entity of Tata Digital.

Tata Digital, which is also the holding company for the group's electronics retail chain Croma, got Rs 5,990 crore in numerous tranches from Tata Sons in the nine months leading up to December 2021-22, according to the report.

As Tata Group attempts to take on existing players amid the rapid growth in the consumer digital economy space, it launched on April 7 its much-anticipated super app Tata Neu that allow users to access a range of services from the company-owned brands including Air Asia, BigBasket, Croma, IHCL, Qmin, Starbucks, Tata 1Mg, Tata CLiQ, Tata Play, and Westside.

Tata Group is preparing itself to take on established giants such as Amazon and Flipkart in the Ecommerce space.

Tata Sons has invested Rs 5,882 crore in its ecommerce company Tata Digital. This is the most the Tatas have invested in ecommerce in any single fiscal year.

The additional funding takes overall investment into Tata Digital in 2021-22 to Rs 11,872 crore, reported The Economic Times, citing regulatory filings of Tata Group.

According to the publication, in filings to the Registrar of Companies (RoC), it is mentioned that the board of Tata Digital on March 30 approved the allotment of 5.88 billion fully paid-up equity shares of Rs 10 each on a rights basis, aggregating to Rs 5,882 crore, to Tata Sons, the holding entity of Tata Digital.

Tata Digital, which is also the holding company for the group's electronics retail chain Croma, got Rs 5,990 crore in numerous tranches from Tata Sons in the nine months leading up to December 2021-22, according to the report.

As Tata Group attempts to take on existing players amid the rapid growth in the consumer digital economy space, it launched on April 7 its much-anticipated super app Tata Neu that allow users to access a range of services from the company-owned brands including Air Asia, BigBasket, Croma, IHCL, Qmin, Starbucks, Tata 1Mg, Tata CLiQ, Tata Play, and Westside.

A dozen airport drivers, firefighters and even plane maintenance staff reported to work drunk in India in the first two months of the year, a regulatory crackdown found, reigniting concerns about flight safety in an aviation market that’s previously had issues with inebriated pilots.

Under a program initiated by India’s Directorate General of Civil Aviation, ground employees with IndiGo -- the nation’s biggest airline -- SpiceJet Ltd., and even Indian Oil Corp. were found to have failed breath-analyzer tests in January and February, according to a person familiar with the matter. A first breach leads to a suspension, and repeat offenders may see their permits to work in airports confiscated, the person said, asking not to be identified because the information isn’t public.

India in December revised guidelines to expand the universe of airport workers who would be subjected to breath-analyzer checks. Maintenance staff and anyone who visits the cockpit for inspection, audit or training were included. The list has since been expanded further to include drivers of baggage carts, loaders, push-back operators and air traffic controllers, the person said.

Expanding the testing pool will bring Indian airport safety and operation standards closer to global benchmarks. Even when blood alcohol levels are near zero, the effects of any alcohol consumption can last as long as 36 hours, according to guidelines released last year.

A spokesman for India’s civil aviation ministry, which oversees the DGCA, didn’t have an immediate comment.

IndiGo said in a statement that January 2022 “witnessed the peak of Covid cases during the third wave.”

“Being on certain medication can also lead to employees failing the breath-analyzer test,” according to the statement. “However, cases of ground staff failing this test are far and few between. We follow all laid down protocols to ensure the safety of our passengers and employees.”

Representatives for SpiceJet and Indian Oil didn’t immediately respond to requests for comment.

In 2018, a senior pilot with former state carrier Air India Ltd. -- who was also a member of the airline’s board of directors and was in charge of its overall flight operations -- tested positive on a breath test just an hour before he was scheduled to fly to London from New Delhi. Two years earlier, the DGCA ordered Jet Airways India Ltd. and Air India to file police complaints against pilots who were found drunk, deploying legal action for the first time ever in such cases.

Other countries and airlines have faced issues with drunk pilots. Japan Airlines Co. was forced to put off a bond sale in 2018 and its president took a 20% pay cut for a few months after a pilot showed up drunk just before he was to operate a London-to-Tokyo flight. A year later, South Korea’s transport ministry suspended the license of a pilot at budget carrier Jin Air Co. for 90 days for failing an alcohol test before a flight and imposed a 210 million won ($172,200) penalty on the carrier.

The State Bank of Pakistan (SBP), the country's central bank, on April 7 announced a 250 basis points hike in the benchmark interest rates, taking it to 12.25 percent.

The decision was taken by the SBP at an emergency meeting of the monetary policy committee (MPC) called earlier in the day.

"Since the last MPC meeting, the outlook for inflation has deteriorated and risks to external stability have risen," the central bank said in a statement, adding that "heightened domestic political uncertainty" has contributed to a 5 percent depreciation in the Pakistani rupee.

This, in addition to a number of external factors including the Russia-Ukraine conflict and the tightening of fiscal policy by the US has compelled the MPC to revise the key lending rate which stood at 9.75 percent before the meeting, the SBP said.

"The MPC noted that the above developments necessitated a strong and proactive policy response. Accordingly, the MPC decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent. This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory," the statement said.

The SBP, citing the future markets, suggested that global commodity prices, including oil, are likely to remain elevated for longer and "the Federal Reserve is likely to increase interest rates more quickly" than previously anticipated.

"As a result of these developments, average inflation forecasts have been revised upwards to slightly above 11 percent in FY22 before moderating in FY23," it said, adding that the current account deficit is still expected to be around 4 percent of GDP in FY22.

The MPC was of the view that a "reduction in domestic political uncertainty and prudent fiscal policies" should help ensure that Pakistan’s robust economic recovery from COVID-19 remains sustainable, the central bank noted.

President Joe Biden’s top economic adviser said the administration has warned India against aligning itself with Russia, and that U.S. officials have been “disappointed” with some of New Delhi’s reaction to the Ukraine invasion.

“There are certainly areas where we have been disappointed by both China and India’s decisions, in the context of the invasion,” the director of the White House National Economic Council, Brian Deese, told reporters at a breakfast Wednesday hosted by the Christian Science Monitor.

The U.S. has told India that the consequences of a “more explicit strategic alignment” with Moscow would be “significant and long-term,” he said.

While the U.S., Europe, Australia and Japan have piled economic sanctions onto Russia in response to its war against Ukraine, India has declined and instead has sought to continue imports of Russian oil.

New Delhi’s reaction to the invasion is complicating its relationship with Washington, where India is regarded as an important partner

in countering Chinese influence in Asia.

Deese’s comments come after Deputy National Security Advisor Daleep Singh traveled to India last week for meetings with officials.

“What Daleep did make clear to his counterparts during this visit was that we don’t believe it’s in India’s interest to accelerate or increase imports of Russian energy and other commodities,” Press Secretary Jen Psaki said earlier this week.

India’s Ministry of External Affairs didn’t respond to a message seeking comment sent after normal business hours.

India’s Foreign Minister Subrahmanyam Jaishankar Wednesday again underlined the importance of New Delhi’s ties with Moscow.

Russia is an “important partner in a variety of areas,” the minister told parliament. “Like all other countries, we too are assessing the implications” of Russia’s war in Ukraine and “deciding what is best for our national interest.”

The U.S. and the rest of the Group of Seven nations will continue to collaborate with India and hope that they can align efforts to the greatest extent possible, a U.S. official said in a briefing for reporters Wednesday on new sanctions against Russia. India and the U.S. collaborate extensively on food security and global energy, the official said.

The official asked not to be identified as a condition of the briefing.

In addition to seeking Russian oil, India is the world’s largest buyer of Russian weapons. Indian Prime Minister Narendra Modi has resisted entreaties from the U.S. and Australia to scale back the relationship, insisting that India needs Russian weapons to counter both Pakistan and China and that alternatives are too expensive, according to people familiar with the matter.

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