Diesel price rise: Was the UPA bold or just cornered?

Is it a bold step by the government to allow the oil marketing companies to raise the price of diesel by 50 paise per month or is it a necessary step that the government was cornered into taking?

Narendra Taneja, South Asia Buereau Chief of Upstream, said, "This is a historic development. Once you leave the functioning to the oil companies, then its the best thing that can happen."

According to him, the move will allow OMCs to regulate prices as close to the international price of diesel as possible and also reduce the under-recovery that is hurting their bottomline and profits. Since diesel is largely consumed by the rich, he said, this move would not hurt the poor in turn.

How will the diesel price rise affect the common man? IBNLive.com

Experts however are divided on whether the move was precipitated by necessity or whether it was a decisive and carefully thought out policy decision. The fact rests that the government has been sitting on this decision for the past 26 months and did nothing to save the bleeding OMCs.

Left economist Prasenjit Bose said that the move is going to hurt the common man severely. He said, "Some commodity that affects the food prices, fare prices has been deregulated and common man will be burdened. Do you leave something like this to the vagaries of the market?"

He said that instead of criticising the subsidies that are offered to the OMCs one should look at the subsidies that are offered to the super-rich and how there is a large amount of corporate tax write off in the budget - which could otherwise allow the government to bolster much needed revenue streams.

Published Date: Jan 18, 2013 10:28 AM | Updated Date: Jan 18, 2013 10:28 AM