Indians Can Expect Diesel Price Drop

Diesel prices are likely to come down. The indication comes from Oil Ministry, which states that the loss incurred on the fuel has been wiped out and there is over-recovery of Rs 0.35 per litre from today (September 16).

Perhaps, this is for the first time that the cost of diesel in India is more than the global cost. According to some reports, the government may decontrol diesel pricing after elections in Maharashtra and Haryana, which are scheduled for the next month. Deregulation would empower state-owned oil companies to change rates as per the global costs.

Global crude prices have gone down to around $97 per barrel. This, along with monthly price increases of up to 50 paise per litre, has helped oil companies balance out their losses.

RBI Governor Raghuram Rajan said, recently said, "Lower crude oil prices are helping consuming countries like us. Typically a lower oil price means a lower CAD (current account deficit), 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 next revision in diesel prices is due by the end of this month. If diesel prices get reduced, it would be the first cut in last seven years.