Government deregulates diesel fuel prices

Posted on Mon ,20 Oct 2014 3:50 pm
Vaibhav Yedavi
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Government deregulates diesel fuel prices

The Government of India has deregulated the price of diesel fuel in the country. The retail price of the fuel will now be decided by the oil companies instead of the government, and it will fluctuate depending on the international crude oil prices.

The price of diesel was always decided by the government till now, and it was always priced below the cost of production. The government used to subsidize the oil companies for the cost difference and this resulted in huge expenditure (running into thousands of crores per year) to the exchequer.

The deregulation has already led to a cut in the diesel prices. In Mumbai the latest price of diesel is Rs.63.54/l, a reduction of Rs.3.72/l from the earlier amount of Rs.67.26/l. But this price will increase or decrease depending on the international crude oil pricing in the future.

Now private companies like Reliance, Essar and Shell will also be able to sell diesel fuel through their outlets. Earlier these companies could not do so, as they didn’t receive the subsidies which the government oil companies enjoyed.

The downside to the deregulation is that the prices of goods in the country will shoot up as soon as the diesel prices increase, as diesel powered vehicles are a major way of transporting goods across the country.



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