Government to Decontrol Diesel Prices: Diesel Prices May Go Up

Diesel prices to be decontrolled, this question have been raised many times but nothing was done in the past as the issue was very sensitive. Indian Parliament has finally announced that it is willing to make diesel prices market determined as it was done with the petrol prices a year back. However, the retail selling prices will be controlled to wad common Indian. India is likely to see important reforms in the coming six months, including on subsidies and diesel decontrol may be partially implied and the FDI in retail. As there are different kinds of diesel decontrol that can happen, and this decontrol can partially shield the consumer. However, the global rise and fall of diesel prices will be reflected in India. This is important to make the market work efficiently.

The opposition opposes this move from the government to make the diesel market prices to be market controlled. The government is saying that this decontrol of diesel prices was decided in 2011 only, however it is yet to be seen that it is fully or partiall0y implemented by the government. As diesel is a basic fuel for all types of transport, so it will have  surging effect on the price rise and have an effect on the auto industry as well. The market trend right now is bent towards diesel fuel vehicles, however if diesel prices decontrol principle is passed if will definitely have an adverse effect.

The discerning question here is how the increase cost burden that will come with diesel price liberalization will be borne by different diesel users. The problem here does not reside with the opulent passenger car buyers. Every time diesel car prices are raised in India, the move is strongly opposed by the trucking industry. If the diesel subsidy are eliminated the diesel price in India will go up by Rs.13.89 per litre i.e. round about 32% more.

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