Government asks OMC’s to take up burden of crude oil price increase by Re. 1/- per litre. This is not a good decision, when crude prices dropped, they brought in duties to take advantage of the gains and filled the government kitty. That was a good decision because small difference in price which the consumers were used to spending will not help them save big & rather make them spend that gain in unwanted luxuries. The same amount if saved by the government will help them get some big projects done, which will benefit the whole population. It actually helped the government to clear off the bonds that it had given OMC’s to make good of the losses when crude was its peak as they were selling at lower prices to ensure that our economy does not suffer.
Now when crude prices moved up, government still wants to have the same revenue and pass the burden to the OMC’s just because they were used to it, is a bad decision. It shows that, Government is not worried about businesses going under loss, while it wants its share to be intact.
OMC stocks which gained strength on their own weight which was not so far since their existence now is again going back in the losing spiral. Stocks have started to bleed heavily post this decision from the government.