Cheaper auto fuel fails to keep commodity prices in check

NEW DELHI: The government’s decision to cut diesel prices may not have a desired impact on rising commodities prices. Transporters have decided to absorb all benefits of lower diesel prices to protect their bottomlines.

The government had recently reduced Re 1/lt on diesel and Rs 2/lt on petrol to check price rise of essential commodities. Transporters argue that the recent reduction of diesel price does not provide any room for reducing freight charges. Besides, they want to encash on rising demand of vehicles for transporting goods. “This is usually the peak period for the transport industry with a huge demand for goods vehicles. March witnesses the highest freight rates, determined largely by the demand and supply of trucks,” Transport Corporation of India (TCI) executive director Vineet Agarwal said.

TCI operates nearly 6,000 trucks everyday. Some argue that the fuel price reduction is not sufficient to meet the rising input cost. “Prices of steel, tyres and lubricants is on an increase. Further, the toll charges on some of the new highways is keeping freight rates up since it leads to high overall operating costs. Automobile companies engaged in building trucks and heavy vehicles have also increased the chassis prices. Given all these high input costs, the effect of a Re 1 cut in diesel price will have no substantial impact,” Mr Agarwal said.