Diesel price to be hiked towards the year end?

According to the latest news, the Petroleum Ministry will apparently reduce the subsidy offered to the oil companies run by the State Government to 33.3% from the current 38.7% to supply the diesel to the consumers at a subsidized rate. In the process, the difference amount will have to be borne by the consumers as the government will wash its hands off the rest of 5.4%. However, this is just a proposed plan from the Petroleum ministry awaiting the approval from the Union Finance minister, Pranab Mukherjee. Once this happens, the diesel price hike is most likely towards the end of this year. The rise in the diesel price will add to the inflation in the country as diesel is one of those important commodities to account for a 5% of the Wholesale Price Index (WPI). The WPI is used to measure the inflation in a country based on the changes.

The Petroleum Minister Jaipal Reddy believes that the dual pricing or the subsidies on the diesel has to be removed as this is influencing the market negatively, which leads to the false impression on the Indian economy. The diesel is extensively used for the commercial purposes in the sectors like, transportation, power, agriculture and railways.