The dawn of 2024 has ushered in significant adjustments to fuel prices in India, presenting a contrasting picture for different sectors. In a move that impacts businesses nationwide, the price of commercial liquefied petroleum gas (LPG) cylinders has been substantially increased. Simultaneously, the aviation sector has received a welcome boost with a sharp reduction in the cost of Aviation Turbine Fuel (ATF).
Commercial LPG Gets Costlier for Businesses
Effective from the first day of the new year, the price of a 19-kg commercial LPG cylinder has been raised by ₹111. This revision was announced by the country's leading oil marketing companies, including Indian Oil Corporation (IOC). Following this hike, the new price of a commercial LPG cylinder in the national capital, Delhi, stands at ₹1,823. This is a significant jump from the previous rate of ₹1,712.
This price adjustment is specifically targeted at the commercial sector, which includes restaurants, hotels, catering services, and other businesses that rely on LPG for their operations. It is important to note that this hike does not affect the subsidized domestic LPG cylinders used in households. The pricing for domestic cylinders remains unchanged, providing some relief to common consumers.
Aviation Sector Celebrates ATF Price Cut
In a contrasting development that brings cheer to the aviation industry, the price of Aviation Turbine Fuel (ATF) has been slashed. ATF prices have been reduced by a steep 7%, marking a considerable decrease. In Delhi, the price of ATF per kilolitre has been lowered to ₹1,01,397. This is a reduction of ₹7,706 from the earlier price of ₹1,09,103 per kilolitre.
This price cut is expected to lower the operational costs for airlines, potentially leading to more stable or even reduced airfares for passengers. The reduction follows the trend of monthly revisions based on international benchmark prices and the foreign exchange rate. The aviation industry, which has been grappling with high fuel costs, will likely welcome this positive start to the year.
Understanding the Price Revision Mechanism
These price changes are a routine exercise conducted by oil marketing companies. Commercial LPG prices are revised on the 1st of every month, based on a formula linked to international product prices and foreign exchange rates. Similarly, ATF prices are also revised on a monthly basis, typically on the 1st. The simultaneous announcement of these revisions highlights the dynamic nature of fuel pricing in India, which is influenced by global market fluctuations.
The dual announcement creates a mixed economic impact. While the commercial LPG hike may lead to increased operational costs for small and medium businesses in the food and hospitality sector, the ATF price reduction is a positive indicator for the travel and tourism industry. Analysts will be watching closely to see how these adjustments influence inflation and sectoral growth in the coming quarter.
