Deregulation of diesel price will enable enable oil industry to invest in next gene cleaner and environment friendly fuels for Indian auto industry. Vikram Kirloskar, President SIAM says the move was long awaited and is comes into effect at a time when crude prices have fallen, thereby making possible diesel price reduction due to the deregulation.
Deregulation of diesel prices reflects in part the larger picture that points to implementation of long-pending economic reforms so India can progress to its next high growth phase. Private players will enter the market ensuring a competitive fuel market in India, which is beneficial for a customer. Fiscal deficit reduction will aid the Government to arrest inflation effectively to introduce an early interest rate cut.
Reduction in diesel price will also lower industry, and transport costs making room for deflationary impact on the economy, which is essentially a diesel run economy, being the chosen fuel choice for transporters and commercial vehicles. In all, economic recovery is a possibility. Diesel price deregulation now warrants a new remedy. A higher tax imposed on diesel cars to recover diesel subsidy would no longer be a pre-requisite, and will make way for a more rational and sustainable ‘Duty and Tax’ structure for diesel cars at centre, and state levels.