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Topic : Should fuel prices be deregulated?
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Created by : Padmaja Baskar, Product Development Manager, ONGC  | 02 04 2010 10:06:18 +0000
Industry : Oil & GasFunctional Area : India(Markets)
Activity:  1030 views;  last activity : 07 06 2010 20:18:09 +0000

On Wednesday, Kirit Prakash presented report on fuel pricing to Petroleum Minister Murli Deora advocating total decontrol of oil prices, while recommending an immediate increase in prices of kerosene by Rs 6 per litre and LPG rates by Rs 100 a cylinder. He pegged the losses of state-run oil marketing companies at Rs 40,000 crore on account of having to sell transport fuels at below cost.

http://travelblog.portfoliocollection.com/FeaturedImage/petrol-pump.jpg

According to his comitee, the fuel pricing policy will address government's fiscal problems. But there is no way the current pricing policy can be continued. There is a possibility of government's taking a decision on freeing petrol and diesel prices after the report. But if it happens, petrol prices may go up by Rs 4.70 a litre and diesel by Rs 2.30 a litre.

So users, do you also believe there is a need to deregulate the fuel prices in India?

 
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Top Argument
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Since the crude prices seems to be stable, there shall be limit on fuel prices.....
By Sudheendra Nanjangud, Design Engineer, Saudi Basic Industries Corporation  02 09 2010 18:04:28 +0000
 
Top Argument
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Should not be deregulated in haste. This is not the proper time.

Common man is suffering for price rise and we do not know whether production of food grains and commodities wiil be good this time. Wait and watch strategy will be best


By ASOKE KUSARI, Domestic Private Banking-Executive/Manager, A large leading PSU Bank - India  02 04 2010 18:10:12 +0000
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Indian economy is growing day by day, so the demand of fuel will increase and if the fuel price is not deregulate now the burden of subsidy will increase and the loss of PSU's will aslo increase. The burden of subsidy finally passes on common man only indirectly. so its better to deregulate the fuel price then only we can control on usage of fuel

 


By Rajesh Kumar Thakur, Regional Sales & Marketing Manager, E G Gas Limited  | 04 07 2010 09:07:50 +0000
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i won't like to say yes from general public point of view..but yes it should be deregulated, because it  will be controlled by the demand and supply gap...the Govt. need not provide the subsidies to the oil companies, which money can be used for other development works..also the oil companies will not be in loss...


By sanjeeb tamuli, Business Development-NER, Indian Energy Exchange Limited  | 02 13 2010 12:00:47 +0000
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Yes-- It will then be controlled by the international price as in Gold, silver, steel etc.After all how long can a govt shoulder this burden. In case the prices fall-- the benefit should be surely passed on to the public gracefully.
By Rajwant Singh, Country Head- Customer Service, TVS Auto Bangladesh Ltd  | 02 10 2010 13:08:51 +0000
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I am always for deregulation of fuel prices. The problem being that it is just helping us to hold on to older inefficient technologies. This is a very dangerous situation, the government controls the price normally allowing us to grow inefficient transportation systems. One fine day the price of petroleum raises so much that our government losses projections turn high. On that day they will raise the price. Since our systems at that point is inefficient the costs raise gets multiplied down the line and gives raise to insane inflation.

Recently read an column in "Times of India". It was named as Swamionomics after the person who writes it.

This person reflected a similar view. Its only countries that are regulating the fuel prices that experience serious inflation on fuel price raise, as it is not expected. The countries that have de-regulated them actually see an average of just 1% inflation all round the year, thanks to the fact that they expect the raise. When the expect the raise they are prepared for it. More efficient forms of transportation takes priority.

 

Based on this I can surely say that the day we deregulate we will experience and inflation. Within 1-2 years the inflation will drop significantly adding more expend-ability to people's hands. My best guess is that this winter the first thing the government has to do is to de-regulate fuel prices as it is normally low in winter, which will lead to a apparent drop in prices. 

This is just a start. Once fuel prices are de-regulated we will first start to see good quality fuels and verity of fuels. We will automatically see 15 year old trucks disappearing off the roads. We will see increase in sales of automobiles. With good quality fuels better automobiles will follow behind. Then there is also a chance for competition, within fuel makers. Its a plus to every one, except for the people who dont want the above to happen. 


By Arun Murali, Senior Software Engineer, Mind Tree Limited  | 02 08 2010 15:21:45 +0000
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100% Instead of trying to spend huge amounts of our taxes in saving oil companies govt can spend that money more wisely in other things. Deregulation will also save huge amounts of fuel itself as we will be more conscious about their cost. This is also likely to open up market for Bio-Fuels and other fuel saving technologies, which are dire need for the nation.

The moment Deregulation happens  the prices of the goods are likely to go up but the overall cost will only go down as people are likely to find ways to reduce travel distance and costs. 


By Arun Murali, Senior Software Engineer, Mind Tree Limited  | 02 06 2010 02:24:24 +0000
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Absolutely,the fuel prices should be regulated. I believe, there should be a limit on the fuel prices.

The fuel price should be in the price range or the prescribed limit.

Hopefully, this will happen one day.

For now, the petrol prices are on the rise which is not too good.


By Ranadeb Ray, Administrative Executive, Kreuz Subsea Pte.Ltd.  | 02 05 2010 05:52:06 +0000
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Yes, the market forces should decide the price of the commodity, in the case of petroleum products a comparison is required with other countries on the Govt levies like ED,CST,VAT, road tax, educational tax and all types of charges booked on to this product. Subsidies are not required even to the unprivileged  below poverty level peoples if the tax structures are comparable.


By Ganagaraj Ramachandran, Head/VP/GM-Production/Manufacturing Covanta Madurai Operating Pvt Ltd  | 02 05 2010 05:04:22 +0000
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I think we should allow the fuel prices to be decided based on the demand-supply position and international market rates.

We always have the fear that withl increase in fuel prices, the prices of comodities will go up thereby will increase the inflation. Let me tell you when the Sugar went from INR 15-18 / kg to INR 45 per kg there was not much of hue and cry as the demand-supply has balanced the equation somehow. At the same time the people are getting used to it / reducing their consumption. Similar things happened in other comodities also.

The imbalance in demand-supply and increase in prices always bring in more innovative products in the market and change in buying pattern. The same thing has happened in USA when the crude reached to USD 140 per barrel and Gasoline to USD 5 per gallon. This has made a dramatic change in the automobile R and D filed and consumption pattern of people. Now in USA there is intensified research on electric / hybrid cars also people are preferring the small cars. So it is a matter of time and finally the things will settle down at it own.

So there is no need to ask various panel to make the reports on oil. There is a time to implement. JUST DO IT ... REST WILL BE DONE AUTOMATICALLY.

Praveen
91-9324289504


By Praveen varma, Sr Manager, Reliance Industries  | 02 05 2010 03:03:50 +0000
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Subsidy of any kind is a fraud perpetuated to promote misuse, adulteration, and corruption. It also promotes inefficiency. Earlier deregulated the better it would be. Competetion would bring down the prices by increasing competetion and consumer getting products at competetive import parity prices with no/little oligopolistic margines earned by all those in chain.


By Devenda Kumar Agarwal, GM-Chief, Performance Management Benchmarking  | 02 04 2010 15:50:41 +0000
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I have been LPG transporter for all three Oil corporates at Vizag for 8 years, have seen and brought to the notice of Vigilance and CBI on how LPG is misused. Subsidies in Kerosene / LPG end up in wrong hands and no policy maker was willing to look at this as it would effect vote bank, now with Recession least they are acknowledging. its high time we open mkts and let mkts drive price which will bring down wastage.

There are always mechanisms to help/guide if mkts fluctuate , we should come out now or never!!!


By Phani Mohan krishna, Head/VP/GM- Purchase/Material Mgmt, ANAGHA DATTA TRADE  | 02 04 2010 12:59:28 +0000
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I think yes since a price hike of petrol and diesel is imminent unless finance ministry pays full cash compensation to state-owned oil companies for kerosene and cooking gas. Losses on petrol and diesel are to be compensated by state-owned upstream companies and I think in order to controll this, it is very much important to deregulate the suel prices.


By Padmaja Baskar, Product Development Manager, ONGC  | 02 04 2010 10:06:18 +0000
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India is rich in energy resources.but unfortunately very less in oil asset.instead of deregulating fuel prizes,fuel consumption should be reduced.goverment should give some allowances to those companies who have their own transport system and company should give some extra to the employees.it shoud be done in such away that we are able to acheive our main goal.
By vivek parmar, B.Tech/B.E. student, riet,jaipur  | 06 13 2010 16:41:57 +0000
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Deregulation of fuel prices will have an big impact on the common people. The competation in the maket is limited for competation among the players, in the monopoly type the price will set to rise.

Instead of deregulating the fuel prices the govt should introspect the real cause &  priotize the useage to effective control.


By Cyril , Sr. Engineer Business Excellence  | 02 22 2010 04:19:16 +0000
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feul prices should not be deregulated by government.Burden will go on common man which is the working class of india & biggest tax payer.
By ranjt bhaskar moholkar, as chemist, precision camshaft  | 02 11 2010 05:39:44 +0000
1
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Recently elder of the Ambanis gifted a jet to his beloved wife,

such a pity ! he could not gift her an Airbus.All because of the

fuel prices being regulated.Down down stone hearted govt.

that is not allowing Sahjehan -Mumtajmahal to be recreated.

Moreover ,the fancies of common man has no bounds.He has

started sending his kids to a good school that too on an auto.

Can you believe it ! This is really a height of extravaganza.This

is all because the tax paid by him is used as subsidy for the

LPG.What a  utter waste.That money was supposed to be used

by govt. isn't it ? So the ideal situation would be let the market

be deregulated.Let Mr Ambani open his closed Retail outlets and

fulfill his dreams.Let the common man pay for the taxes and also

for the LPG.Let us put an end to his extravaganza !

 


By Amit Kumar, Design Engineer, Bharat Heavy Electricals Limited  | 02 05 2010 14:19:10 +0000
1
1

If fuel prices are deregulated, the common man will have to shell out loads of money from his/her pocket. They will be the main sufferer. Also, the inflation is also slated to rise in a spiral fashion. It is accepted that the fiscal deficit will get reduced considerably, why doesn't the government spend more money on oil exploration and let encourage private participation to the fullest ? By doing this, the government can regulate the oil prices as per the common man's budget or else the middle class public will be die. Deregulating fuel prices at this stage when inflation is unabated and the Governnment appears to have no will to reign it, will add to the woes of the people beacuse we know that inflation rises day by day which effect the middle and poor class people. In this inflation days govt should take care of each and every peoples pocket. Let the government improve purchasing power of the people, give boost to infrastructure and then deregulate fuel prices. Let the goverment not look just the urban segment and it is very important for them to take care of rural segment from where the government earns.


By Shikha Malhotra, Product Development Manager, Reliance Petroleum  | 02 05 2010 08:44:02 +0000
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