DEREGULATION Decontrolling or deregulating the petrol prices mean that, the government will no longer be subsidizing petrol prices and the prices will be purely linked to international crude prices. In the case of diesel prices, though it will be only partially regulated- the reason being an attempt to avoid sudden spike in inflation.
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Overview Government of India deregulated the prices of petroleum products Decision was taken on 25 June 2010 at EGOM (Empowered Group of Ministers) Decision was made on the basis of recommendation by Kirit Parikh Committee
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The Big Rider This
is not the first attempt by the government to deregulate
petroleum product prices.
In April 2002, in an attempt to phase out subsidy on petroleum products, the government dismantled the administered pricing mechanism (APM) For pricing of Petrol an diesel
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ECONOMY BEFORE DEREGULATION
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Efficient global player. Allocation of funds for social welfare. Competition and prise stabilization. Development. Increase investment. Private players will re-emerge. Lessen the inflation burden.
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POSITIVE IMPACT OF DEREGULATION
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Private Players will re-emerge
Improve Valuation of OMC
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W ill
reduce Budget Deficit
Social Initiatives
Positive signals in the Global Market
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CONCLUSION The
overall de-regularising effect will be helpful to Government
Reduction in subsidies
However, absence of: o
The
timeline of the diesel price deregulation,
o
The
frequency of change in petrol price, and
o
Pricing limit (band) for petrol price takes some sheen off the decision.