Petrol prices may be up Rs3.50 per litre from Monday

Consumers may have to shell out Rs3.50 more per litre of petrol and diesel from Monday 7 June if a ministerial panel sets out to narrow the gap between domestic street price and global motor fuel markets to free up petro pricing regime.

This will be the second instance in over a year when the pump prices rationalise to reflect the global rates within the leeway afforded by the political implications.

A fortnight back, a deregulation would have sent petrol prices up by Rs6.68 a litre in one go in Delhi and diesel prices would have shot up by Rs5.81. Under that scenario an increase of Rs 3-4 a litre in petrol price and Rs 2-3 on diesel instead of deregulation of the pricing regime would have been preferable.

However, the situation has changed with the increase required in case of deregulation coming down to around Rs3.50 with prices in global crude and product markets which together decide the required retail price, cooling off. Freeing up of the pricing would now mean petrol price will increase by Rs3.35 per litre and diesel by Rs3.49.

According to analysts, the deregulation, if it does take place will be limited to a certain price level and on certain conditions, beyond which government controls will come into play.

An increase to this level will not stoke inflationary trends say analysts and though food prices were up 0.32 percentage points to 16.55 per cent for the week ended 22 May, experts say the index would come down in the next 2-3 months.