The government on January 18 authorised state-run oil marketing companies to hike diesel prices bit by bit over a period of time. Prices increased by 0.45 paise per litre (excluding VAT) of diesel fuel. The new price of diesel in Delhi is Rs 47.65 per litre, Rs 53.71 in Mumbai, Rs 51.51 in Kolkata and Rs 50.68 in Chennai.
As per a statement issued by IndianOil Corporation, “As a result of the above, the under-recoveries on HSD, both bulk and retail, shall decrease by approximately Rs 3,400 crore till March 2013. Based on the current prices and volumes, the decrease in the under-recoveries on annual basis on HSD shall be approximately Rs 15,000 crore for OMCs as a whole.”
This move is likely to affect market dynamics gradually. The diesel price hikes, when implemented in stages, will help reduce the imbalance between diesel and petrol. It has been over two-and-half-years since the government linked the price of petrol to international prices. Since then, prices have gone up by at least 12 times and today, the differential between both fuels is around Rs 21 a litre.
Rivan RS 
Viraaj Bhatnagar
Uday Singh
Suraj Viswanathan
