It has already been reported that 20 per cent of India’s trucks are off the roads due to the price hike and shortage of diesel afterwards. There have been long queues on petrol pumps, and shortages of diesel have been reported from various states, though the public sector oil companies have claimed that there is no shortage of diesel at national level but shortages reported are localized. They have also claimed that demand is expected to ease with fall of the monsoon.

Indian Oil Corporation Limited (IOCL), which is India’s largest state owned refiner and fuel retailer, has reportedly said that petrol sales rose 14 per cent and diesel around 18 per cent during in may up to May 22, compared to the corresponding period last year. However, this is not a matter of pride, because the panic buying might have increase the sale, meaning thereby, the crisis has already produced panic among people.

Another thing is to be noted is the reported statements from the IOCL officials that the institutional and commercial customers have increasingly moved to state-run retail outlets since bulk diesel supplies are priced significantly higher than retail. The gap in the price for bulk institutional or commercial buyers and at the retail outlets is about Rs40-42 per litre. It is obvious that retailers have been selling diesels to other than retail consumers, which is unfair which also leads to black-marketing of the diesel, that needs to be stopped immediately.

India has about 95 lakh commercial vehicles, and if one fifth of them are off the road, it is a matter of concern. About 19 lakh commercial vehicles going off the road has significantly delayed the goods movements that has put the inflationary pressures on all goods – both food and non-food items, apart from rise in the freight rates causing general price rise for all goods. It has increased even the input costs of all productions, that have causes price hike of almost all products. There is a tremendous inflationary pressure.

The direct impact on small commercial vehicle operators is now clearly seen. They constituted over 70 per cent of the total commercial vehicle in the country. Price rise of diesel has increased their operating costs and reduced their income margin. They are battling to survive. According to the National President of All India Transport Congress until now diesel accounted for 40-45 per cent of the operational costs, which have now increased, sharper for local operators than the operators on the long routes.

Several reports said that small and mid-sized commercial transport operators have been impacted the most by the diesel price hike. The 20 per cent commercial transport vehicles off the road are said to be of the mid-sized commercial transporters, and the operational delays have impacted all level of commercial transporters. In certain transport corridors, the freights have been reportedly risen between 10 to 15 per cent.

It should be taken into consideration that road transport carries about 65-70 per cent of India’s freight movement with diesel as their backbone. Diesel typically accounts for 40-55 per cent of total operating cost. For a long-haul truck running 250-350 km daily consumes roughly 80-120 liters of diesel. On an average consumption of 100 liter, the daily expenditure has risen over Rs750 and monthly over Rs22500. It is too heavy a cost. Longer the destination, greater the extra cost per trip. The cost is being passed to FMCG companies, E-Commerce firms, food suppliers, and consumers.

Impact on food prices is now being felt, especially on vegetables and fruits, which are highly transport sensitive, such as tomatoes are supplied from Nashik to Delhi, Karnataka to Bihar, and Andhra Pradesh to eastern India. After sharp diesel price hike, the prices of onion, potatoes, milk, poultry and fish prices may rise sharply. Retail vegetable prices are expected to rise by 15-25 per cent according to some estimates.

It will also have significant impact on passenger transport services. Many State Transport Undertakings (STUs) are already financially week, such as Maharashtra State Road Transport Corporation, Bihar State Road Transport Corporation, or Karnataka State Road Transport Corporation. They will need to increase fares, and bus frequencies are being reduced on rural or unviable routes. Workers, students, and patients are particularly affected due to non-availability of services or travelling costs.

As for auto-rickshaw and taxi drivers, the rise in CNG, petrol, and diesel prices, their earning have considerably reduced. They have reported loss of about 17 per cent of their daily income, as it has been reported. They are trying to pass the increased costs to the commuters and altercations between them on fairs have become common.

Road transport has increased the cost of coal, cement, steel, fertilizer which will be impacting almost all sectors of economy. The situation has been impacting the job market. From February, when the Iran war began at the end of the month, unemployment in India has been on the rise. In April it was 5.2 per cent, even before the petroleum price rise. Job market distortion is imminent along with inflationary pressure on the economy. (IPA Service)