Government deregulates diesel price

The Central government has deregulated the price of diesel. This means that just like petrol prices, the price of diesel too will be determined by the global market forces. The price of diesel shall vary depending on the rise and fall of oil in the international markets

Fall in price

Currently, the price of oil in global markets is on a declining trend. The oil prices are at a four year low. Hence, the deregulation is expected to result in the reduction of diesel prices. In Delhi, the price of diesel is expected to fall by Rs. 3.37 a litre This will be the first reduction in diesel rates in over five years.

Scenario prior to deregulation

From January 2013, diesel prices are being raised in stages through a 50 paisa per litre increase every month, in an effort to bring them to the global diesel price levels. Since January 2013, the rates have cumulatively risen by Rs. 11.81 per litre over a span 19 measured periodical increases. Traditionally, oil firms have incurred huge losses on diesel, because the price tends to be much lower than the costs incurred by the companies in procuring and distributing the fuel .However, since the second half of September, the companies have actually started making profits because of the fall in global oil prices. The profit has reportedly since reached Rs 3.56 per litre. This reduction did not reflect in the prevalent prices of diesel. However, now with deregulation, the price of diesel will be adjusted to reflect this.

 elief for PSUs

The deregulation bodes well for PSUs like ONGC which will no longer have to bear the brunt of subsidizing diesel.

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Categories: Business & Economy Current Affairs 2017

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