When I first went to U.S some 10 years back, I was very intrigued about one thing – The petrol prices changed on daily basis, they would either go up or go down by a few cents – unlike in India where prices changed only when Government decides to do something about it.
Now we may see a very similar situation in India as well, as the government is seriously considering freeing up the petrol prices. This has been going on for a while – The talk of being Petrol Prices decided by World Markets. If you are not aware, India has fuel price structure that is regulated by the Government and not by the market forces.
Till few months back when Petrol prices were at its lowest (less than $50 a barrel), the Oil companies were giving it to us at a premium, while as the fuel prices have increased worldwide, they are now selling it at a discount, by absorbing the losses. As most of these Oil companies are state run, Government is under pressure to cut the losses !
At current Market rate, petrol should have been dearer to us by Rs. 4.72 (Close to 53 rupees) and Diesel by around Rs. 2.33 (close to 40 rupees). If the policy is passed to free up, thats the kind of rate hike you should look at !
I for one am very much in favor of freeing up Auto Fuel prices – worldwide that is the norm and I think here in India we should adopt it as well. However, I would not like to see essentials like like Cooking Gas and Kerosene freed up, purely because subsidies are required in this area to keep it affordable
What is your take on freeing up fuel prices?
Note: I am not an expert on how the fuel prices work in detail, this post is based on my limited understanding :)
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Fuel prince freeing is good decision. But if theing about the petrol prince in all other part of the world india is having the highest petrol price. Our governent is taxing heavily on the import of cude oil and because of this only cost came around 48 per ltr for petrol and 38 for diesel. But actual cost+ refining cost will be around 25. and Tax is allmost 100 % for this. if petrol price is freed then this huge margin to the government should be reduced.
No im comfortable with the current pricing policy as Indias average income is still very low and even a slight increase in the fuel prices will dig a hole in the family budget of majority of the country.Cause it is not only the fuel like petrol but also LPG.A cost that the Government has always been willing to bear to make sure that this doesnt create a spiralling down of diposable income.Im all for Controlled pricing and if there is a spiral hike of prices at thee world stage,they should increase the domestic prices in a phased manner.(it helps them politically as well).
I am with you sir, Balaji Yadhav, Indian govt. should regulate the petroleum prices because if the govt. leaves the domestic prices to move on with world prices, it will reduce low group’s income through rising food prices. There is many ways to counter the fiscal deficit if the question is for macroeconomic stability as to enhance the real tax base by passing the petroleum price on rich people, leaving the poor people untouched.
Hey, I subscribed to your blog it this afternoon and I must say I really like what I have seen so far.
As about fuel prices, I wrote an article on how freeing fuel prices will lead to solving a lot of our global problems like climate change and stuff. It might make for an interesting extended read.
http://www.adityakumarnayak.com/2010/01/solving-climate-change-free-market-way.html
Even though there is steep rise in the fuel price, it will not be affecting the growing Indian car market. But this could lead to a demand of electric cars in India.
hi
In my opinion govt should go for freeing up the fuel pricing.
Even in India fuel prices are increasing day by day inspite of govt regulation so it would be better if it is controlled by world market forces.
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