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Diesel Prices To Be Decontrolled Soon
Diesel is one of the fuels that the government still has a say on the price. The government is offering a subsidy on the heavy fuel to help farmers who use it in their tractors. The government has indicated its discomfort regarding the increasing density of diesel cars and the increased use of diesel particularly by gas guzzling SUVs.
Oil companies have been seeking the government's permission to decontrol diesel prices in India so that their losses due to fluctuating crude prices are reduced. Petrol prices in India have been partially decontrolled with periodic revisions. However diesel prices have remained the same across the country.
Demand for diesel cars has increased n the past two years for this very same reason. Car buyers feel diesel cars will be cheaper to own on the long run despite their prices being high as they are more fuel efficient and diesel is cheaper than petrol.
Carmakers are preparing to make huge investments to match consumer demand. But if the government decides to decontrol diesel prices, they might have to reconsider their decision. If diesel becomes expensive at least some car buyers who use their cars marginally will opt for petrol cars. This will be good news for some carmakers who have a huge stocks of unsold petrol cars.
Diesel prices in India are a sensitive issue. The government will have to think twice before it takes a final call on this. Car buyers who are planning to buy a new car in the coming months also need to be aware about how diesel prices will fluctuate due to the government's decision. The situation is a little tricky for both the car buyer and the carmaker. It would be prudent for the government to make its stand clear so that no stakeholders are severely affected.
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