The government on Saturday deregulated diesel prices. In simple terms, the government will no longer decide the selling price of diesel in the country. That decision will now be taken by oil retailers such as Indian Oil Corp, BPCL and HPCL.
The move also eases the government’s huge subsidy burden paid out of the budget. In the first quarter of this fiscal (April-June 2014), the under-recovery burden on oil marketing companies was Rs 9,037 crore which would have required a sharing mechanism between the budget, consumers, OMCs and upstream oil and gas companies.
Petrol and diesel prices were deregulated in April 2002 when the NDA government led by Atal Bihari Vajpayee was in power. But administered pricing regime made a back-door entry in 2004 with UPA Petroleum Minister Mani Shankar Aiyar pushing for control on diesel, LPG and kerosene prices.