India: Public Sector Companies Will Peg Prices to Singapore Index
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Monday, 21 November 2011 |
The three publicly owned oil companies have agreed to revise petrol prices on a fortnightly bases and peg prices to the Singapore index for petrol. India Oil Corporation, Bharat Petroleum and Oil India Limited have agreed to the mechanism that will make pricing petrol less opaque and more predictable.
The Economic Times welcomed the decision, and went on to call for deregulation of diesel prices. “We are increasingly and overwhelmingly dependent on oil imports and domestic prices of petro-products do need to reflect international scarcity value. The idea that raising prices of diesel - the fuel of transport and haulage - would amount to feeding inflation is misplaced and lacks empirical basis,” said the newspaper in an editorial. “Allowing diesel prices to rise to reflect costs is crucial, for keeping the budgeted fiscal deficit in check. Repressed diesel prices lead to excessive consumption and a larger fiscal deficit, which itself is a source of inflation,” it added, saying that allowing third-party marketing of all fuels would be of long-term benefit to consumers.
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