The Centre announced on Saturday that it would lift controls on diesel pricing with immediate effect in a move that led to an immediate fall in pump prices of nearly 6%. Here are six things you want to know about the move.
Diesel price goes down Rs 3.37 with immediate effect
Why it's big?
# The government has deregulated diesel prices
# Now, oil companies will fix pump price of diesel according to crude price costs
# Diesel price will go up if crude prices rise; will fall in crude becomes cheaper
# Petrol price is already market-determined and change every fortnight
How was it earlier?
# The government fixed diesel price
# Oil companies often used to sell diesel at a loss
# The government used to subsidise oil companies to cover for this loss and keep retail diesel prices low
What led to it?
# Global crude oil prices have fallen to $84 a barrel, a fall of nearly 25% in the last six weeks
# This has helped oil companies to fully wipe out the losses on diesel price
# Since January 2013, diesel rates have cumulatively risen by Rs 11.81 a litre in 19 instalments
# Rates of diesel were last raised on August 31 after which losses have dipped
In Delhi price of diesel expected to go down by Rs. 3.37 effective midnight tonight: Arun Jaitley pic.twitter.com/BxtxZQ7iZh— ANI (@ANI_news) October 18, 2014
What's in it for you?
# Fuel bills will come down or rise depending on crude oil prices
# Diesel price, like that of petrol, will likely change every fortnight
# Deregulation will push private companies like Essar and RIL to open fuel stations
# Consumers will have more choice; competition will keep prices in check
Why is fuel deregulation important?
# Market-determined fuel prices would cut subsidies
# Lower subsidy bill will help govt cut taxes on petro products
# This will help offset the shocks when global crude prices shoot up
Read:Govt raises natural gas price to $5.61/unit