Modi Government Could Deregulate Diesel Prices

The newly-elected Modi government may deregulate diesel prices. Currently the government increases diesel prices by 50 paise every month. The reason for deregulating diesel is the wide gap between cost of material and retail price.

The government will not be introducing a one time increase in diesel prices as that would burden the users. They will introduce a systematic increase in every months prices of diesel. That means they will hike the 50 paise rate to a bigger amount to curb deficits.

The Modi government is expected to decrease the subsidy on kerosene and LPG too. The newly elected government has no breathing space and has been pushed into action. They are trying everything to control inflation and need to take action.

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The government is not expected to completely deregulate diesel and will do it slowly and steadily. They are expected to completely deregulate diesel prices in India in the following 12 months. Diesel prices will then be on par with international markets.

The government is in charge to maintain the prices of kerosene, LPG and diesel in India. The losses that is incurred by oil companies is paid by the government, however, they get it late after a period of three to six months. Thus, it would be best to deregulate diesel prices in the coming months.

The government will confirm and reveal its decision during the annual budget. This will be the first budget devised by the Modi led government and every sector is waiting keenly for it to be presented.

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