Not just crude, fertiliser & metal prices a concern too - Times of India

Not just crude, fertiliser & metal prices a concern too – Times of India


NEW DELHI: The government may not let oil companies rush in with an increase in petrol and diesel prices to help with the under-recoveries. Although oil remains a key concern for the Centre, the spike in metal and fertiliser prices following the Ukraine war is an equally big worry, official sources said.
“The entire focus is on fuel prices but there are other areas where we need to give equal attention,” a senior official said. While oil price rise is expected to push up costs for all segments – from households to industry and services – the surge in metal and other commodity prices too is expected to fuel inflation apart from creating supply shortages.
For instance, the higher cost of aluminium, nickel and other metals is expected to result in an increase in the cost of finished goods such as automobiles, electronic goods and even renewable energy industries.
In some cases, such as sunflower oil, the government has held discussions to explore other sources amid indications that the industry is looking to push substitutes into the market at a time when palm oil prices have also shot up.
Retail inflation is already at the upper end of the RBI’s 2-6% tolerance band and the war has upset the central bank’s calculations. Most of the commodities have cooled off from the highs seen around a week ago.
Besides, the rise in fertiliser prices and inputs will also push up the Centre’s subsidy bill as it has been taking over the liability in recent months, instead of passing on the higher prices to farmers – a key constituency and a strong lobby group that raises its pitch whenever a cost increase takes place.
In some cases, such as oil and diamonds, Russian companies have reached out to India to continue with supplies, something that domestic entities are not averse to and even the government appears open to retain its relationship with an old ally. But it’s looking at ways for smooth flow of shipments into the country.


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