Will deregulation in oil sector benefit consumers? Impact on agriculture and the poor need to be considered

The unsustainability of the pricing regime for petroleum products being followed in the country has been obvious to the decisionmakers for at least a couple of decades now. The Kirit Parikh Committee’s (KPC) recommendations on deregulating prices of the auto fuels, petrol and diesel, would lead to an increase in the prices these products by about Rs 7 and Rs 4 per litre respectively.

While recognising the inelastic demand for petrol and the relatively higher paying capacity of petrol users, the KPC virtually dismisses considerations of the impact of diesel price increase on agriculture by saying that the government can make good this higher cost through a higher minimum support price for agriculture.

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