India: High oil prices to hit common man hard

As stocks surged and salaries grew, urban India almost breezed through the dramatic rise in world oil price, from $50 a barrel to $100 in just two years. But chances are that it may now begin to hurt. Crude prices touched a new high of $109 a barrel on Tuesday and Wall Street’s biggest bond house Goldman Sachs (which got its earlier forecast right) on Tuesday talked of a ‘Super Spike’, that could take prices up to $200.

Choppy markets and a high oil bill could be double whammy for the economy as well as Indian consumers. Even if politics postpone any big hikes in petrol and diesel prices, air travel could turn out to be more expensive and power bill could make you sweat.
“Travel demand has been impacted by the higher fuel surcharge (Rs 1,600 per ticket), but we have no option but to increase this further if oil prices continue to rise,” said Jet Airways chief executive Wolfgang Prock-Schaeur. Till now, the salaried class has been able to weather the oil-driven inflation, largely on the back of pay hikes, with rural folks taking the hit.

Economic Times