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The cost of diesel per litre has also increased to Rs 69.31 per litre in Delhi and Rs 73.79 a litre in Mumbai.
The government, on more than one occasion, has talked about a ‘long-term’ solution to insulate retail prices from the volatility in global crude oil price. A development that took place on Monday seems to be the first concrete step towards this.
The oil ministry headed by Dharmendra Pradhan has given the in-principle nod to the Indian Commodity Exchange (ICEX) to launch futures on petrol and diesel. “We have received the ‘no objection’ from the ministry,” said Sanjit Prasad, MD, ICEX.
Read: Sebi close to clearing petrol, diesel futures
However, for the move to fructify, ICEX needs clearance from Securities and Exchanges Board of India (SEBI). “If SEBI gives the go ahead, the exchange is prepared to launch the products within a day,” Prasad said.
WHAT ARE FUTURES?
By definition, Futures are financial contracts which obligate the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price. Thus, futures trading involves buying specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
HOW IT MAY BENEFIT CONSUMERS?
The launch of futures contracts on diesel and petrol will allow consumers to buy these contracts at a fixed price to take delivery at a future date. This means if they buy some amount of petrol and diesel at a particular price on a particular date for taking delivery say after a month, and even if the price is higher on the date of delivery, they will still get the products at the same price on the date of purchase.
Thus, futures trading of petro products might help guard against volatility in prices triggered by global factors. Since June 2017, oil marketing companies in India have been changing the prices of diesel and petrol daily.