MOSCOW, September 17 (RIA Novosti) - A decision will be made following elections in October whether government control on diesel pricing in India will continue, Reuters reported on Wednesday.
"We tinker with diesel prices once a month...There is a case for a cut in diesel prices towards the end of the month but a decision is yet to be taken on that," a source with direct knowledge of the matter was quoted saying by Reuters.
"Decision on diesel deregulation will be taken after state elections," the source added.
The country's government originally took control of diesel prices in January 2013 as an attempt to ease inflation and help the poor by marginally raising prices each month. However, local prices have now hit numbers higher than global rates causing many to demand the deregulation of diesel.
"Lower crude oil prices are helping consuming countries like us. Typically a lower oil price means a lower CAD, lower oil subsidies and lower inflation. We need to seize this moment to eliminate diesel subsidies completely. We should take this moment to eliminate diesel subsidies as soon as possible," the current Governor of the Reserve Bank of India, Raghuram Rajan was quoted as saying by the Economic Times.
The next revision in diesel prices will be at the end of September and will likely be handled with a price hike once again. The deregulation of the prices, under India's election rules, cannot take place until after the assembly election in Maharashtra and Haryana on October 15. Rajan claims approval of the removal of subsidies may come too late as oil companies could change rates in tandem with cost as they have done in the case of petrol since June 2012.
Oil Ministry officials said after under-recovery is eliminated, a proposal would be submitted to the Cabinet Committee on Political Affairs for the freeing of diesel prices as was done in the past for petrol.
