When you buy something in a higher price and sell it in a lower price then you suffer loss- to understand this you do not need to become an Economist. The more you a firm continues it the more loss it will suffer and in one stage it may get bankrupt. This is the thing now Indian public sector oil firms are dealing with. The state run oil firms suffered a net loss of 97 billion rupees in the first three quarters of the last fiscal year. State run oil firms have to sell oil at a discounted price to the people and this way their loss is only increasing every day. India's oil minister, Murli Deora, has asked for a change in tax system to ease off the pressure faced by the oil firms.
The only solution seems to be in decreasing tax of oil import and increasing the price of oil price in the local market. However, both the ways have problem for the government. On the one hand, if the government decreases tax on petroleum import then it will lose substantial amount of revenue. On the other hand, the Indian government does not want to increase oil price right now as there are local elections in 5 states. Any price hike will surely effect on vote.
Since there is no sign of decrease in the price of oil in the international market, Indian state oil firms can expect to suffer more loss for the time being.
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