Top 10 Impacts of Diesel Price Hike

TNI Bureau: Decision for fuel price hike might be ‘unavoidable’ for the government, but what the middle class people will do? Either they will look for alternate option or go for protest. The possibility for the black marketing will also increase trouble for the consumers. People will have to face tough days and here are some impacts due to the diesel price hike.

1.    The very first consequence of diesel hike is increase in transportation charges due to the cascading impact of higher diesel prices that results in increase in price of almost all commodities.

2.    Any increase in the price of diesel directly affects the life of ordinary people, the common men and they are the worst sufferer here.

3. In auto industry, the increase in diesel prices will not only push sales of petrol cars but bring down overall demand.

4. The hike in diesel prices will impact freight costs and raise prices of general products.

5. There could be a marginal rise in petrol car sales in the long run as an impact of the diesel price hike, but it is will reduce the sale of diesel models.

6.  The direct impact of diesel price hike will uplift the inflation rate. Taking into consideration this present Rs 5 hike, it would lead the inflation to around 65bp on WPI inflation.

7.   The diesel price hike will also make the WPI inflation for LPG to rise. Impact of the current hike in diesel price and capping on LPG will lead to a position of 20-30bp on WPI inflation.

8.   Hike in diesel price directly increase the cost of production of the farmers as diesel is used in almost all agricultural activities from irrigation to cultivation and transportation. Any increase in diesel price thus pushes farmers backward.

9.   The indirect but solid consequence of the petrol price hike will raise the price of meal of the citizens, resulting to more problems for the society as they are already grappling with commodity price.

10.  The increase in diesel prices will aid in trimming the fiscal deficit and improve economy’s credit rating.

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