Prime Minister Narendra Modi gave a gift four days ahead of Diwali by deregulating diesel prices. Finance Minister Arun Jaitley announced the government’s decision of lifting its control over fuel prices on Saturday. Soon after the decision was announced diesel price took a dip of 3.37 INR. It is the first time that diesel prices are slashed since September 2010.
Now diesel prices will depend on international market of crude oil and government will have no control over it, said Jaitley. Indian Oil chairman B Ashok indicated that state-run retailers would continue with the system of revising prices every month for now. Diesel prices have been raised by 19 times by 50 paise per litre from January 2013 to September 2014, after which retailers started making profit on back of contraction of crude oil prices in international market. Crude oil prices have dipped to four-year low, trading at $83 per barrel. Prices are further expected to fall that might reduce the cost of living by 3-4%.
New government waited for drop in international prices for retailers to recover from previous loss before deregulating oil pricing. Some experts are accounting this decision with upcoming assembly elections in Maharashtra and Haryana.
It isn’t the first time that diesel price has been deregulated; the NDA government under Atal Bihari Vajpayi did the same in April 2002. However, the UPA government under Manmohan Singh soon reversed the decision and took control over the prices.