At a time the aviation sector has been widely acknowledged as one of the worst hit by the coronavirus pandemic and the subsequent lockdown, the steep hike in the price of aviation turbine fuel (ATF) for the second time in a month will deliver a severe blow to the industry.

ATF price has been hiked by Rs 5,494.5 per kilolitre, or 16.3 per cent, to Rs 39,069.87 per kilolitre in the national capital, according to a notification by state-owned oil marketing companies (OMCs). On 1 June it was increased by a record Rs 11,030.62 to Rs 33,575.37 per kilolitre.

Such frequent and significant hikes are likely to throw the balance-sheets of aviation companies into huge stress when they are already grappling with high debt. Besides, it is a known fact that the past three months saw no fresh revenue inflows and there is little hope that passenger traffic will rise in the next few months.

When the government is speaking of taking urgent steps to revive the nation’s economy, such retrograde moves are uncalled for. Petrol and diesel prices were also hiked for the 10th day in a row. Petrol price in Delhi was hiked to Rs 76.73 per litre from Rs 76.26, while diesel rates were increased to Rs 75.19 a litre from Rs 74.26.

The diesel price rise is the highest daily increase since state-owned oil companies started daily revision in rates in May 2017. With the 10 hikes, petrol price has gone up by Rs 5.47 per litre and diesel by Rs 5.8 a litre in the national capital. The rates have been increased across the country, but depending on the incidence of local sales tax or VAT these vary from state to state.

The hike in petrol and diesel prices has a cascading effect on prices of all commodities. Due to rise in the cost of transportation, food prices will automatically jump giving a push to inflation. Thus the common man, already suffering from the consequences of the Covid-19 pandemic, will be in further crisis.

The decision to raise fuel prices in such a manner and at such a time is definitely insensitive. This is particularly so when global fuel prices show a falling trend. Oil marketing companies get only 30 per cent of the price a consumer pays for petrol or diesel, and the balance is collected by the Central and state governments.

For example, according to an OMC, in Delhi when a consumer pays Rs 76.31 a litre for petrol, only Rs 22.11 goes to the OMC. The Centre collects Rs 32.98 as excise and the state governments get approximately Rs 17.71 depending on the prevailing tax rate.

Thus the Congress president Sonia Gandhi’s allegation in a letter to Prime Minister Narendra Modi that the government is “profiteering off its people” when they are already in a deep crisis cannot just be brushed aside.