The prices of petrol and diesel have been increased
There has been a sudden increase in the prices of petrol and diesel across the country from May 15. In Ghaziabad, adjacent to Delhi, the price of petrol has jumped from Rs 94.89 per liter to Rs 97.77. At the same time, diesel, which turns the wheels of the economy, has increased from Rs 88.03 to Rs 91.04 per liter. According to market experts, the roots of this latest inflation lie far away from our borders, in the ongoing war in the Gulf countries. The huge rise in crude oil prices in the international market has made fuel expensive in the domestic market.
If seen from the consumer’s point of view, this increase may seem to be only two to three rupees per liter. But, the rule of economics says that the prices of petrol and diesel never increase alone. This brings with it a whole cycle of inflation in transport, groceries, fruits and vegetables and every other essential item of daily living. The concerns of middle class families have increased, because this decision is going to have a direct impact on their fixed household budget.
Expensive tickets ranging from freight to public travel
Changing figures on petrol pump machines are like an alarm for the economy. Diesel is called the ‘blood’ of the Indian economy. As soon as diesel becomes expensive, the first and most profound impact falls on the transport and logistics sector of the country.
Goods are transported across the country through trucks. As soon as the diesel going into the tanks of trucks becomes expensive, the freight charge is immediately increased. This means that when the goods coming out of the factories reach the wholesale market and then from there to your local shop, the cost of transportation is higher than before.
The condition of public transport is also not untouched by this. The operation of buses, autos and taxis is directly dependent on fuel prices. The impact of this increase in bus tickets and auto fares is sure to be visible. In such a situation, the cost of travel for a person who takes public transport to go to office every day is going to increase. The cost of freight transportation simply means that whatever is being transported by trucks or goods trains, it is just a matter of time for it to become expensive.
Spoiled budget from milk, vegetables to ration
Whenever fuel prices increase, the common man gets a ‘double shock’. The first shock occurs when he fills oil in his car, the second and bigger shock occurs when he goes to the market to buy vegetables or ration.
Vegetables, fruits, milk, grains, edible oil and packaged food, all these things are loaded in trucks from farms and factories and reach cities. Especially perishable goods like green vegetables, milk and fruits are most affected. To keep these things safe, cold storage and fast transportation network is required. Both things depend on electricity (generator) and diesel.
Diesel becoming expensive by Rs 3 means that the journey from the farmer’s field to the city market has become expensive. The market broker does not pay that money from his own pocket, he collects it from the retailer. The retailer also does not bear the loss, he recovers it from the final consumer i.e. you and us. In this way, the inflation of petrol and diesel indirectly increases the cost of our and your food plates.
Everything from delivery apps to cabs will be expensive
Today’s urban life is largely dependent on online delivery and app-based services. The increase in the prices of petrol, diesel and CNG is going to have a big impact on this digital economy as well.
Delivery partners of food delivery apps (like Zomato or Swiggy) and e-commerce companies deliver the goods to you only after filling petrol in their bikes. Due to increase in fuel cost the cost of delivery increases. The result is that companies have to increase their delivery charges, platform fees or surge pricing.
Cab and bike taxi fares are also directly linked to fuel. Due to CNG becoming expensive, it is considered almost certain that the fares of autos and cabs running in the city will increase. This means that if you book a cab every day to go to office, or order food from outside on weekends, now you will have to shell out a little more for it.
Inflation hits every wheel of the economy
Heavy machinery used in the manufacturing sector and large generators for power backup run on diesel only. The cost of bringing raw materials to factories and delivering finished goods to the market increases. To compensate for this increased manufacturing cost, companies increase the prices of their products. This effect does not appear overnight, but gradually creeps into the market.
Farming in rural India is still heavily dependent on diesel. Whether it is driving a tractor, irrigating fields with tube wells or pumpsets, or loading the crop in a tractor-trolley and taking it to the nearest grain market after harvest – diesel is spent at every step. Due to diesel becoming expensive, the total input cost of farming increases. Increase in farmer’s costs directly means food inflation graph going up.
Apart from this, the rise in international crude oil prices also impacts Aviation Turbine Fuel (ATF), i.e. airplane fuel. If you are planning to travel by air during the upcoming festive season or holidays, then flight tickets may also be more expensive than before.
How much will your household budget deteriorate?
It is very important to understand how an increase of just Rs 2-3 per liter can shake up the monthly expenses of a common family. We can understand this with the example of both direct and indirect expenses.
- Cost of school van – When the price of CNG and diesel increases by Rs 2 to 3 per liter, the operators of school vans and buses are the first to increase the fare. Estimatedly, the fare may increase by Rs 150 to Rs 200 per child. If two children in your household go to school, the school transport expenses will increase by an additional Rs 300 to Rs 400 every month.
- Personal vehicle expenses – You use your car or bike to go to office every day. If your car consumes 50 liters of petrol in a month, then the direct effect of increasing the price of petrol by about Rs 3 will be that you will have to pay Rs 150 more every month at the petrol pump.
- Daily ration expenses – Due to cost of transport, the prices of milk, vegetables, fruits and ration also increase. A family that spends Rs 8,000 per month on groceries and vegetables, due to the increased cost of freight, this bill may increase by 3 to 5 percent. This means that there may be an additional increase of about Rs 250 to 400 in the ration budget.
- Other expenses (cabs, delivery) – Using cabs 4-5 times a month or online food delivery due to surge pricing and increased delivery charges. Here too, you are likely to comfortably spend an additional Rs 100 to 150 per month.
If all these small things are added up, then an increase of Rs 2 to 3 in petrol and diesel can add an additional burden of Rs 1,000 to Rs 1,400 every month to your household’s monthly budget. Your salary remains the same, but the ‘purchasing power’ of your wallet has decreased.
Also read- Expensive oil will spoil the kitchen! From onion-tomato to pulses-rice, what can be expensive?
