Gasoline in India is cheaper than countries like Hong Kong, Germany and UK but more expensive than China, Brazil, Japan, USA, Russia, Pakistan and in Sri Lanka, according to a report by BOB Economics Research.
Rising fuel prices in India have led to considerable debate over which government, state or central, should cut taxes to keep prices in check. The rise in fuel prices is mainly due to the rise in the world price of crude oil (raw material for the manufacture of gasoline and diesel). Additionally, a stronger dollar has added to the cost of crude oil.
The Bank of Baroda Economic Research report juxtaposes May 9 oil prices in various countries with per capita income.
“For a set of 106 countries for which data is available, the price in India at $1.35 per liter ranks 42nd. So there are more than 50 countries where the price is higher. This should reassure that in absolute terms, India is no exception. The median price was around $1.22 per litre,” he said.
Fuel prices in India are on par with those in Australia, Turkey and South Korea.
It is lower in Hong Kong, Finland, Germany, Italy, the Netherlands, Greece, France, Portugal and Norway where it is over 2 dollars per litre.
Among comparable countries (per capita), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka and Venezuela. Countries that are major oil producers have much lower prices.
”The price of petrol in India doesn’t seem too out of place. However, when juxtaposed with per capita income, it can be seen that wherever prices are higher, per capita income is much higher than in India.
“Consequently, the economic pain caused is much higher for low per capita income countries because its direct and indirect effect on inflation is greater, which in turn affects low income groups the most,” says The report.
In the report, the Philippines has comparable gasoline prices but has a per capita income that is more than 50% higher than India. Countries that have lower per capita income like Kenya, Bangladesh, Nepal, Pakistan and Venezuela have much lower gasoline prices and are therefore less affected than India.
“Therefore, there are still good reasons for the government to consider reducing fuel taxes to protect the interest of the people,” the report said.
India is the third largest oil consumer and importer in the world. It imports 85% of its oil requirements and therefore sets the retail price of fuel at import parity rates.
With the global surge in energy prices, the cost of producing gasoline, diesel and other petroleum products has also increased for oil companies in India. They hiked petrol and diesel prices by Rs 10 a liter in just over a fortnight from March 22 but hit a pause button soon after as the decision made the criticized and opposition parties have called on the government to cut taxes instead.
The central government has so far resisted calls for excise duty cuts and instead asked the state government to cut VAT or sales tax to relieve ordinary people.
Petrol in New Delhi currently costs Rs 105.41 per liter and diesel is priced at Rs 96.67 per litre.
Hong Kong has the most expensive gasoline at $2.58 per liter while Malaysia has the cheapest at 47 cents per litre.
It costs $2.29 per liter in Germany, $2.28 per liter in Italy, $2.07 per liter in France, $1.96 per liter in Israel, $1.87 per liter in the UK and in Singapore, $1.75 per liter in New Zealand and $1.36 per liter in Australia.
Gasoline prices in India and Turkey are the same at $1.35 per litre.
Japan has a lower fuel price at $1.25 per litre. China has an even lower rate at $1.21 per liter while it’s even cheaper in the United States at 98 cents per liter.
India’s neighbors have cheaper fuel – petrol in Bangladesh costs $1.05 per litre, 77 cents per liter in Pakistan and 67 cents per liter in Sri Lanka.