Fuel Prices in India and How it Affects Energy Consumption Choices

Abstract

Fuel prices in India have risen, causing consumer decision making changes for transportation, cooking, and lifestyle. This paper discusses the fuel price volatility from 2020-2023 and the causes of price increases. This consists of supply shocks caused by the lack of a kerosene subsidy, the repercussions of price freezing in diesel and petrol, and the volatility caused by political elections. Furthermore, it is uncovered whether the government should subsidise fuel for rural households in Uttar Pradesh, India. Results from a survey of 200 households show a rise in fuel prices, which have caused homes to shift from kerosene (a source of light and cooking) to solid fuels such as dung cakes, firewood and plastic. Lastly, the paper finds that the government could subsidise fuel for households in rural India in order to provide support for basic necessities like cooking fuel. In order to discover these findings, a preliminary literature review was conducted, as well as original research collection in the state of Uttar Pradesh, India. Survey questions pertaining to income, fuel use, and fuel type were gathered.