Government is planning to link diesel prices to international rates. Considering present prices of international crudes, petrol price has been increased incredibly by Rs 3.50 a litre. And diesel on the similar lines Rs. 2 a litre.

There will be periodical revision, as, said by our petroleum Minister Murli Deora of petrol prices based on the fluctuation in international crude prices, which is presumed to happen every fortnight.  Alike, the government is determined on total deregulation of diesel price in phases so periodical revision of diesel price may also be on the cards soon and these prices would be completely market driven depending upon the cost of imports at the refinery level and at the retail level.

Again as government has decided for de-regulation of diesel, this will lead to the re-emergence pf private oil retailers (Reliance, Essar) which were closed down due to price hike and shut down their business. However now they will enter the market with good competition with oil PSUs and in a way beneficiary would be consumer.

Considering this as on another side as blessings in disguise then we could look at the factor that this move of government let the market prices influence the petrol prices, this entails that prices can also come down. Many other benefits as in reduction in fiscal deficit entail more money in the market for Private sectors for more investment and this would give a birth to competitive market

Well last but not least all these recommendations are from Kirit Parekhs committee, and again this was an outcome of G20 meeting held in Toronto.

Certainly this is not at all good news for a middle class or average class of people if we look at the price hike in petrol, diesel now and in near future they will have to confront the LPG and kerosene prices which will touch the sky again. This in turn will increase inflation so common man has shove his hands in the pocket when he goes in the market and just turn back to home again. Always with the government policies common man suffers and privileged group remain untouched by all the worries. 

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written by Santosh, July 02, 2010

Subsidy is not healthy for good economics.It is like pouring water over you from your own reservoir to give you the feeling of heavy rain. A growing economy should be capable to tide over international price rise through accelerating exports and other means. As Swami Vivekanand said " You give a man a fish and he will live for a day, you teach him fishing and he will live through his life". I am sure that the Govt is on track.

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written by Sheetal, July 03, 2010

I do agree government is on track, however government should keep in mind that there are categories of human population like BPL, middle class and elite groups. And yes the feeling of heavy rain is only understood by the BPL families and a little bit by middle class. But elite group has a boon in all the policies made by the government. Question here is not that it's on track or not, as answer is yes ofcourse, looking at the positive side of the market economy and growth of it. But they should have considered the other factors and main factor of concern is SOCIETY. And again as said by Swami Vivekananda "Every new thought must create opposition" so yes there will be opposition from within the society itself.

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