India, one of the largest imported of oil is always vulnerable to the international oil price fluctuation. When oil price in international market fluctuates, Indian market, public opinion and political stability fluctuates as well. One can not deny that the current government enjoyed a good political stability in India due to low oil price in the international market.
According to the Petroleum ministry report (http://petroleum.nic.in/), Indian net import (as India exports a lot of finished products from refinery) of these products stand at INR 624508 crore (approximately $ 96 billion). which is big compared to Indian governments revenue being about $ 420 billion (IMF data).
Higher fuel price means higher transportation cost. This makes the goods at the consumer end more costly. The transport companies actually do not care about the increase in the fuel price because they simply transfer the additional cost to the customer. Not to mention this makes government to collect more tax and consumer to suffer at the end. In addition small businesses often take more advantage of this. They simply charge more from the customer by siting the rise in fuel price. If the fuel price increase by 5% they charge 10% more from the customer for more overall operating cost (fuel price is just one of them). Weakened Indian currency and high crude oil price in International market caused severe inflation in Indian market in 2012-13 and the people mood about the government changed.
In general Indian government used to provide huge fuel subsidy to keep the public mood in favor. But day by day it started become more costly. Recently Indian government saw the opportunity of lower international crude oil price and slowly step by step removed most of the subsidy. Definitely its good for the industry and makes the industry more independent to decide the pricing but the overall Indian market is now more vulnerable to the oil price fluctuation shock.
So the choice of the vehicles should be such that its fuel efficient at least when an individual customer is buying. In case of transporters its still not a that big issue. When last time the fuel price started rising, Indian market saw a fall in the car price selling but the two wheeler market started growing. As the people who runs small businesses and need the vehicle for personal commuting for business started postponing car purchase in favor of two wheeler.
Import value of the crude oil, LNG and other petroleum products
According to the Petroleum ministry report (http://petroleum.nic.in/), Indian net import (as India exports a lot of finished products from refinery) of these products stand at INR 624508 crore (approximately $ 96 billion). which is big compared to Indian governments revenue being about $ 420 billion (IMF data).
Fuel price effect on price level
Higher fuel price means higher transportation cost. This makes the goods at the consumer end more costly. The transport companies actually do not care about the increase in the fuel price because they simply transfer the additional cost to the customer. Not to mention this makes government to collect more tax and consumer to suffer at the end. In addition small businesses often take more advantage of this. They simply charge more from the customer by siting the rise in fuel price. If the fuel price increase by 5% they charge 10% more from the customer for more overall operating cost (fuel price is just one of them). Weakened Indian currency and high crude oil price in International market caused severe inflation in Indian market in 2012-13 and the people mood about the government changed.
Government subsidy
In general Indian government used to provide huge fuel subsidy to keep the public mood in favor. But day by day it started become more costly. Recently Indian government saw the opportunity of lower international crude oil price and slowly step by step removed most of the subsidy. Definitely its good for the industry and makes the industry more independent to decide the pricing but the overall Indian market is now more vulnerable to the oil price fluctuation shock.
So the choice of the vehicles should be such that its fuel efficient at least when an individual customer is buying. In case of transporters its still not a that big issue. When last time the fuel price started rising, Indian market saw a fall in the car price selling but the two wheeler market started growing. As the people who runs small businesses and need the vehicle for personal commuting for business started postponing car purchase in favor of two wheeler.
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