The price of one litre of petrol in India is dearer than most neighbouring countries like Nepal, Pakistan, and Bangladesh, according to a report by the Economics Research Department of Bank of Baroda.
Petrol prices in India, however, are cheaper than developed countries like the U.K., Germany, and France among others.
Rising fuel prices in India have led to a debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices comes on the back of Brent crude – the international benchmark – hovering around $110 a barrel after the Russia-Ukraine war.
High crude prices are a negative for India, which imports around 86% of its annual crude oil requirement.
A stronger U.S. dollar has added to the cost of crude oil. The domestic currency fell to a new all-time low of 77.69 per U.S. dollar on Tuesday. The weakening rupee is expected to increase the cost of the country's crude purchase.
The Bank of Baroda report, which has taken petrol prices as of May 9 in various countries, shows the average price in India $1.35 per litre. The median price was around $1.22 per litre globally.
"For a set of 106 countries for which data is available, the price in India at $1.35/litre is 42nd in rank. Hence there are over 50 countries where the price is higher. This should provide some comfort that in absolute terms India is not an outlier," says the report.
Fuel prices in India are on par with those in Australia, Turkey, and South Korea, the report says.
The petrol price, however, is very high in Hong Kong, Finland, Germany, Italy, Netherlands, Greece, France, Portugal and Norway where it is above $2 per litre.
Among comparable countries (per capita wise), prices are much lower in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, Venezuela. Countries that are major oil producers have much lower prices.
"India's petrol price does not now look too much out of place. However, when juxtaposed with the per capita income, it can be seen that wherever prices are higher, the per capita income is much higher than in India. Therefore, the economic pain caused is much higher for countries with low per capita income as its direct and indirect effect on inflation is higher which in turn impacts the lower income groups the most," the report says.
The Philippines has a comparable petrol price but has a per capita income higher than India by over 50%. Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
"Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people," the report says.