Mumbai: As fuel prices inch closer to the psychological Rs 90-mark in the city where petrol and diesel are the costliest, Union transport minister Nitin Gadkari admitted that fuel prices are “very high and hurting the public”.
While petrol was selling at Rs 89.54 a litre in the city on Tuesday, up 10 paise from Monday, and diesel at Rs 78.42, up nine paise, in over a dozen cities in the state, petrol is already selling at Rs 90-91 a litre, and diesel over Rs 80.
“…. one thing is there that (fuel) rates are very high and it is a situation where definitely people are facing problems,” Gadkari said while addressing the third Bloomberg India Economic Forum in Mumbai.
Gadkari also said he has been told that there is a likelihood of the global crude prices going down. He, however, did not clarify on the source of his information.
The minister, who is in charge of shipping, ports, road transport and also Ganga rejuvenation, was replying to a specific question on high fuel prices and if we should expect any duty or tax cuts in order to make it cheaper for the common people, and said lowering taxes is not in his remit, but of the finance minister.
It can be noted that Maharashtra has the highest fuel cost among all the states as it charges the highest VAT on the petrol and diesel at a little over 39 per cent, including the Rs 9 surcharge on petrol and Re 1 on diesel. While the state charges 25 per cent value-added tax on petrol in Mumbai, Thane, and Navi Mumbai, it charges 26 per cent in the rest of the state.
For diesel, VAT is 21 per cent in Mumbai, Thane and Navi Mumbai, and 22 per cent rest of the state, with a surcharge of Re 1 a litre across the state. Petrol and diesel prices in Mumbai have gone up by Rs 2.60 and Rs 4.03 a litre, respectively, since August 31.
In cities like Parbhani, Nandurbar, Nanded, Latur, Jalgaon, Beed, Aurangabad and Ratnagiri, among others, petrol has crossed the Rs 90-mark on Sunday.
The issue of high fuel prices, which will directly trickle into inflation, comes months ahead of the general elections scheduled for next year. If anything, the depreciation of the rupee against the dollar only aggravates the pain.
Gadkari, however, said that he is confident of the BJP retaining power in the 2019 elections on its performance in the government and enlisted a slew of schemes which it has carried out in diverse sectors including social security and financial inclusion. The minister said that he does not have any ambitions of becoming the Prime Minister even if any difficult situation were to arise. “Modiji is going to be our prime minister. We are all with him, we support him and we are confident that in the next election, he will be our next prime minister,” he said.
Gadkari said there are projects close to his heart, including the Rs 2-lakh-crore river-linking project that will connect five rivers, and Ganga cleaning project, and he wants to see them get completed. He rued that agriculture is not economically viable, stressing on the need for more policy focus on this area and pitched for a shift in crop patterns in the country to support the country’s energy needs.
India to surpass China to become 2nd largest oil demand centre in 2019
New Delhi: India will surpass China to become the second largest oil demand growth centre globally in 2019 on back of buoyant auto fuel and LPG consumption, research and consultancy group Wood Mackenzie said on Tuesday.
In a report, Wood Mackenzie said India’s oil demand growth recovered strongly in 2018, overcoming the aftermath of the implementation of Goods and Services Tax (GST) and demonetisation, and contributed 14 per cent of the global demand growth or 2,45,000 barrels per day.
“We forecast oil demand to grow at the same level in 2019. This will result in India becoming the second largest demand growth centre globally in 2019, behind the US but ahead of China. Transport fuels gasoline and diesel and residential LPG will continue to be the two main drivers of oil demand growth,” it said.
According to the US Energy Information Administration (EIA), India is currently ranked behind the United States and China as the world’s third-largest oil consumer. It consumed 206.2 million tonnes (over 4 million bpd) in the 2017-18 fiscal year.
During April-December, consumption of petroleum products has been 157.4 million tonnes, up 2.5 per cent over year-ago period.
Last August, oil cartel OPEC projected India’s oil demand to rise by 5.8 million barrels per day (bpd) by 2040, accounting for about 40 per cent of the overall increase in global demand during the period.
Mackenzie said diesel, the most consumed fuel in the country, is projected to grow by 6.4 per cent or 1,12,000 bpd year-on-year in 2019 compared with 93,000 bpd in 2018.
This was because of “buoyant commercial vehicle sales facilitated by sustained infrastructure growth, and increasing demand from the construction, logistics, e-commerce and consumer goods sectors,” it said.
Also, the push will come from a demand-based approach instead of a tax-based approach in the logistics sector, following the implementation of the GST, which has led to the removal of inter-state taxes. “This is a structural shift, resulting in increased demand for heavy and medium-duty trucks to achieve economies of scale and operational efficiency.”
More importantly, general elections in May will lead to increased travel activity for campaigning and implementation of infrastructure projects, which will bolster demand in the first half of 2019, Mackenzie said.
“Key risks ensue as crude price volatility is expected to persist. Historically, short-term gasoline demand has been relatively inelastic to retail prices in developing economies such as India. Even though higher retail prices affect consumer sentiment for new vehicle purchases, we believe this trend will continue with income effects driving the demand, subduing the price effects,” it said.
LPG demand growth will remain robust in 2019 at 5 per cent (40,000 bpd) although it is lower than the 56,000 bpd growth achieved in 2018. “The number of new household LPG customers continued to surge, driven by the Ujjwala scheme to promote clean cooking fuel in rural areas. That said, there is a largely untapped market, as around 50 million households remain deprived of LPG,” it said.
On the use of electric vehicles, it said only 2,60,000 EVs have hit Indian roads, majority being two-wheelers.
“Electric car sales, for instance, declined by 40 per cent to a mere 1,200 units in the financial year 2018 over the financial year 2017, while electric two-wheeler sales rose 138 per cent to 54,800 units during the same period. In contrast, China had a stock of 1.8 million EVs and 258 million e-bikes at the end of 2018,” it said.
This year, it said, will be an important year as the final version of the National Auto Policy and the second phase of the FAME scheme will be released.
“The question is the timing will it be before or after the elections? Will the Modi government change tack if it is not re-elected? Will this ambiguity continues to deter wider adoption? Automakers seem to have realised that EV adoption is not a question of ‘if’. For instance, Maruti Suzuki, the largest automaker in India, will launch an electric version of one of its best-selling entry-segment cars the Wagon R in Q1 2019,” Mackenzie said.
Another key challenge will be stakeholder management and coordination across the different ministries, government bodies and industry participants while the policy is formalised.
Stating that two-wheelers will dominate the electric mobility landscape in the personal transport sector, it said India offers huge potential for automakers as car ownership levels are very low (23 per 1,000 capita).
Rising income levels will increase car ownership and most global automakers are closely watching this lucrative market. At the same time, two-wheelers should not be ignored with current ownership six times larger than four-wheelers.
“We believe that two-wheelers are the more effective option given their utility in intra-city travel, less need for public charging infrastructure and availability of battery technology. Two-wheelers will eventually leapfrog four-wheelers towards the goal of a greener and sustainable mobility future,” it added.
Sensex snaps 5-day winning streak on weak global cues, profit-booking
Mumbai: The domestic equity market took a breather on Tuesday after a five-day rising spree as investors booked profits in metal, financials and auto counters, amid weak cues from international markets after IMF lowered its global growth projections for 2019 and 2020.
The 30-share BSE Sensex dropped 134.32 points to end at 36,444.64, while the broader NSE Nifty finished 39.10 points lower at 10,922.75.
Participants were seen taking money off the table after the recent rally, even as the wider sentiment remained positive, underpinned by better-than-expected Q3 earnings by several bluechips.
The BSE Sensex, after resuming higher at 36,649.92, advanced to 36,650.47 on buying by domestic institutional investors (DIIs) as well as retail participants. However, market quickly slipped into the negative zone as investors chose lock in gains in recent outperformers, dragging down the key benchmark to a low of 36,282.93 before ending at 36,444.64 down 134.32 points, or 0.37 per cent.
The gauge had rallied over 725 points in the previous five sessions. Likewise, the 50-stock NSE barometer Nifty finished 39.10 points, or 0.36 per cent, down at 10,922.75 after hitting the day’s high of 10,949.80 and a low of 10,864.15.
Brokers said investors turned cautious and preferred to log profits in recent gainers, dragging down key indices.
“The market tracked other Asian markets following IMF’s weak forecasts of global growth prospects,” said Paras Bothra, President, Equity Research, Ashika Group.
“While India’s economic forecasts were retained, concerns were raised over the difficulties in containing the fiscal deficit. Continued weakness in the rupee favoured IT and Pharma stocks while majority of other sectors were under pressure,” he added.
The IMF lowered its global growth projections for 2019 and 2020 to 3.5 per cent and 3.6 per cent respectively, citing slowdown in several advanced economies around the world more rapidly than previously anticipated.
Meanwhile, India is projected to grow at 7.5 per cent in 2019 and 7.7 per cent in 2020, an impressive over one percentage point ahead of China’s estimated growth of 6.2 per cent in these two years, the IMF said Monday, attributing the pick up to the lower oil prices and a slower pace of monetary tightening.
The International Monetary Fund in its January World Economy Outlook update on Monday said India would remain the fastest growing major economies of the world.
Foreign portfolio investors (FPIs) continued their selling activity on domestic bourses here. They sold shares worth a net Rs 299.79 crore, while domestic institutional investors (DIIs) made purchases to the tune of Rs 520.80 crore on Monday, provisional data showed.
Gold extends gains on jewellers’ buying
New Delhi: Gold firmed up by Rs 125 to Rs 33,325 per 10 grams on Tuesday, largely on the back of sustained wedding season buying by jewellers even as it weakened to near three-week lows overseas.
Silver, however, turned weak due to reduced offtake by coin makers and consuming industries and lost Rs 250 to Rs 39,850 per kg.
Persistent buying by local jewellers, triggered by the ongoing wedding season, kept gold prices higher, bullion traders said.
Globally, gold fell 0.13 per cent to USD 1,278.90 an ounce in New York as a firmer dollar made bullion more expensive for buyers using other currencies. Silver also eased by 0.46 per cent to USD 15.26 an ounce.
In the national capital, gold of 99.9 per cent and 99.5 per cent purity advanced by Rs 125 each to Rs 33,325 and Rs 32,175 per 10 grams, respectively.
The yellow metal had gained Rs 40 on Monday. Sovereign, however, remained unaltered at Rs 25,500 per piece of eight grams on scattered enquiries.
In contrast, silver ready prices dropped by Rs 250 to Rs 39,850 per kg and weekly-based delivery slipped by Rs 264 to Rs 38,876 per kg.
Silver coins, however, were unchanged at Rs 77,000 for buying and Rs 78,000 for selling of 100 pieces.