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Diesel Freed; Falls By Rs. 3.50

PUBLISHED BY: SURENDER KUMAR
OCTOBER 18, 2014

   
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Diesel Freed; Falls By Rs. 3.50

 

The government has finally bitten the bullet by lifting state controls on diesel pricing. From today onwards, the diesel prices will be determined by market forces, a move that has brought down the prices sharply in a few hours by Rs. 3.47 per litre. The system of revising prices every month will continue. Since January 2013, the diesel prices have been raised 19 times by 50 paise per litre till September 1, after which the retailers beagn making profit due to falling crude prices.


Going by global trends, the diesel prices could fall further if the rupee remains strong against the dollar. Oil prices have dipped to their four-year lows, with the global benchmark Brent crude ruling at $ 83 a barrel. Lower diesel prices will reduce freight rates by 3-4%, which alone should reduce inflation as diesel is the main fuel for transporters and directly affects the retail prices of all essential goods. Historically speaking, diesel has been deregulated now for a second time as the NDA government under Atal Bihari Vajpayee had in 2002 deregulated it first. But later, the UPA-1 government under Manmohan Singh reversed it under Left pressure. In January 2013, the UPA-2 government freed up petrol pricing but decided to withhold it for diesel to avoid a shock to the economy.



The first round of deregulation had changed the contours of the fuel retail market as private companies like Reliance Industries Ltd, Essar Oil and Shell entered the fray. Their swanky outlets and service ushered in real competition, forcing state-run retailers to improve their customer service and products.

Private retailers garnered nearly 15-16% of the market in a short period of time. But once government controls came back, the private retailers mothballed most of their outlets since they could not match the subsidized price of state retailers. This locked up huge investments in land and equipment, apart from causing widespread job losses.




Government officials expect the private retailers to return with deregulation. But executives working with private retailers were cautiously optimistic. "It is a welcome decision. But we need to see the fine print... what happens when oil prices start to rise again... whether the government has set a cap at which level it would step in with subsidy. You have to understand that reopening the closed outlets require big investments," a senior executive said on condition of anonymity.

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Jitesh K (Unknown)
77 Followers
Platinum: 18.5KInfluencer7ModeratorWordsmith7
Diesel prices have been deregulated, good in terms or economic reforms, good for private operators, good for govt as they have lower oil subsidy burden......... HOWEVER who will ensure its good for public as who is going to force the transporters and bus operators and taxi operators to reduce freights and fares which were increased due to increase in diesel prices????
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()
Bronze: 232Wordsmith2
Today's move means the government will have no further role to play in determining the price of diesel. Oil companies will have the freedom to raise or lower prices according to international oil prices.
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kushal (Location)
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Aache din aa gaye
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Anonymous Varma (Australia)
28 Followers
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Steps needs to be taken when the fuel price starts rising again. As it will impact the common man hardly. If the govt, thinks other way round then the govt. is going to go for a loss in 2019 irrespective of the job creation or development.
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Shantharaju ()
l welcome deregulation. it's a good step really. The money saved can be utilised for developmental works like infrastructure, creating employment etc. Because subsidy is more remained a remedy nowadays. The politicians have been using it has a bait to fish votes. Unnecessary subsidies should go in the other areas too.
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Roushon (Mumbai)
198 Followers
3 mins ago Platinum: 28.4KInfluencer7ModeratorWordsmith7
Happy Diwali definitely! But caution! The price of diesel will now vary according to international crude oil price. And given the mismanagement and corruption in India, the price of commodities will stay at maximum price and will increase!
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gtgtvictor (KOCHI)
53 Followers
6 mins ago Gold: 12.3KInfluencer6Wordsmith6Networker2
NOT IDENTICAL. THANKS
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gtgtvictor (KOCHI)
53 Followers
7 mins ago Gold: 12.3KInfluencer6Wordsmith6Networker2
A BELATED BUT GOOD DECISION,HELPS MIDDLE CLASS AND AM ADMI PEOPLE . HOPE IF IT LOWERS THE PRICE OF DIESEL AND COOKING GAS , MANY PEOPLE IN OUR COUNTRY BENIFIT
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Rohit (Jammu)
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11 mins ago Gold: 23.8KWordsmith3NetworkerNews King2
Need to cut the taxes from the Oil Prices to help the poor........
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Saurabh Sharma (Unknown)
12 Followers
14 mins ago Gold: 7.8KInfluencer3Wordsmith5News King4
Achhe din. MoreOver First time diesel prices have been reduced in last four years. Govt should see that the benefit reaches the common man.......
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C S (Nerul)
36 Followers
18 mins ago Gold: 8.4KInfluencer6Wordsmith5Networker2
Limiting the increase in the price of gas from $ 4.20 to $5.60 per mmbtu is to be welcomed. Earlier the UPA,govt, based on the Rangarajan Committee recommendation, had agreed to double the price to $ 8.40 per mmbtu wef 1-4-2014. The committee’s recommendation was indexed to the average of the LNG prices at international pricing hubs,, which had no relevance to the cost of production of gas in India. One does not know as to how the price of $ 5.60 was arrived at. Although the reduction in the price of HSD was in line with that of the international price of crude oil, considering the fact that HSD was still cheaper by Rs 10 to petrol, the govt could have utilised this opportunity to create a reserve which could have been handy to absorb likely increases in the international crude prices in the future. One has seen in the past the deregulation in the price of diesel worked well when the crude price was softening; but when the crude price went up there was reluctance to pass on the full impact in the retail price thereby having to subsidise the product. Also as the end use of both diesel and petrol was the same, it was logical that they were taxed and priced on par.
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HKumar (UAE)
1 Followers
21 mins ago Silver: 3.1KInfluencerWordsmith4News King5
it will always be debatable whether it will be an advantage or disadvantage in the long run for making diesel deregulated, but for now it's a relief.
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Virendra ()
111 Followers
25 mins ago Platinum: 15.4KInfluencer7Wordsmith7Networker3
A very good gift for Deepawali, Arun, you are treading on right path, deregulating the diesel, and that is going to have all round effect on cost of living. Also, no Gov.bungalow will be declared a memorial, what a load of rubbish, this action was needed long time back, but the credit was waiting for you. Now.the voters will certainly develop trust in your Gov.and now the Congress is dead, all indjcators point to a long lasting BJP.
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Rakesh Gupta (Unknown)
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33 mins ago Gold: 1.7KInfluencer2Wordsmith4News King3
Dont be baffled by reduction in rates of diesel. The present lower rates are due to lower international rates of crude oil. The future fluctuations of rates will be totally dependent on the international crude rates.
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Ramanathapura Narahari (India)
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37 mins ago Gold: 12.9KInfluencer7Wordsmith5Networker3
Good news?
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VamsiKReddy (India)
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39 mins ago Gold: 9.6KInfluencer3Moderator2Movie Buff
Very nice.
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timesindia421 ()
10 Followers
41 mins ago Gold: 7.9KInfluencer4Wordsmith5News King4
Achhe din. Still Downtrend in oil prices is only temporary. Deregulating diesel prices was a bad idea. Also some bold decisions. Good for the economy in long run...
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Chirag Depani (Rajkot)
55 mins ago
Thanks Mr Modi.
 We believe that if the deisel prices go down then farmer will have good benefite and the transportation charges will also go down.
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ravi (dubai)
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58 mins ago Platinum: 54.9KInfluencer7Wordsmith6Networker3
Achhe din.
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Wind (Location)
173 Followers
1 hrs ago Platinum: 35.3KInfluencer7Moderator3Movie Buff2
Modi is a bit fortunate in his start up. He did not see much volatility in global finance and softening of oil prices have helped to control the inflation. Some of the measures taken by the earlier Government also helped him a lot. We have to see how he reacts when he sees pressures from the above segments.
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satish sripada ()
1 hr ago
Don't worry too much. MODI will have some trick up his sleeve to tackle this problem when time comes
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Wind (Location)
173 Followers
1 hr ago Platinum: 35.3KInfluencer7Moderator3Movie Buff2
There is a short tem gain for the consumers.
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Abhi Tamhane (India)
7 Followers
1 hr ago Silver: 916Influencer3Wordsmith3News King3
The necessity of time and bjp took the call rightly. Our governments have kept indian industry cushioned from global markets for very long time which has ultimately cost the entire nation of development.
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Praful Datkhile (Mumbai) replies to Abhi Tamhane
61 Followers
57 mins ago Gold: 2.4KInfluencer5Movie Buff4Moderator
yes the decision making process is faster
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Umesh B (Unknown)
36 Followers
1 hr ago Gold: 13.4KInfluencer5Movie Buff4Wordsmith6
cost of CNG will increased by 4.50
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Umesh B (Unknown)
36 Followers
1 hr ago Gold: 13.4KInfluencer5Movie Buff4Wordsmith6
Modi's Diwali gift to Ambani............
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