Govt deregulates diesel, fixes natural gas price at $5.61 per mmbtu

RIL to take a hit as UPA had fixed price at $8.4; diesel prices to be market driven

The government on Saturday deregulated diesel prices, a significant piece of market reform, one that, along with kerosene, has tradtionally been considered the third rail of India politics. Diesel prices have been deregulated along the lines of petrol and will now be market driven. The price of diesel in the capital, meanwhile, has come down by Rs 3.37, given the already low prices of the Indian basket of crude imports. 

The Cabinet commitee on Saturday also fixed the price of natural gas at $5.61 per mmbtu on Saturday, down from $8.4 fixed by the previous UPA government. The move will likely impact Reliance Industries the most. 

Diesel deregulation has been a longstanding demand of most economists, who argue that subsidies on the fuel are often misappropriated by those who least need it -- typically the middle and upper classes, as well as wealthy farmers. The freeing up of the fuel's prices will likely also impact the price and demand for diesel cars, which were an attractive option for Indian consumers given the high price differential between diesel and petrol. 

Union Finance Minister Arun Jaitley also announced that no government bungalow will henceforth be used as memorials for departed parliamentarians. The move comes after Ajit Singh's Jat supporters went on a rampage and threatened to cut off New Delhi's water and electricity supply if the bungalow occupied by SIngh was not turned into a memorial in the name of his father, former prime minister Chowdhary Charan Singh. Ajit Singh had been asked to vacate the bungalow after losing the Parliamentary elections.