As we import 80 percent of petrol and crude oil from outside, so the price rise is expected.

But someone has to bear the burden, but why always people why not have something in place which is stable for many years to come by, every now and then we are seeing price rise. So, lets discuss on this important issue of Fuel price deregulation, like who has to bear the burden and who will be having boon, whether the Government, The Oil Companies or People?

What is Deregulation Why Deregulation? The objectives of Deregulation. Major Sectors influenced.

What is deregulation
Fully or Partial removal of government control Simplification of government rules and regulation

Why deregulation
Under a regulated environment, prices are not allowed to rise and fall with market levels so when price goes up, the government has to subsidize the difference between the old and the new price. Regulation would require massive government subsidies to keep oil retail prices low. Our National Treasury simply cannot afford this.

The objective of deregulation

Increase competition International competitiveness and long-term survival of the Indian oil industry. Attract private capital

Major Sectors Influenced

Oil industry

Deregulation

Government

Public

 The current fiscal deficit will come down Will help our PSUs remain competitive. Will restore the competitiveness of our private sector firms like Reliance and Essar It can use the fund for public welfare rather wasting them in fuel subsidy.

 Companies can set the prices as per their requirements

Thus Private sector oil companies and oil marketing companys margins will rise.

 Initially the common man will stand to loose as higher fuel prices destabilises the monthly budget. A rise in fuel prices implies a rise in the cost of everything without any increase in salaries or income. There will be a marginal fall in short term savings. In the long term when crude oil prices stabilise or stay at low levels for a considerable period of time then the common man will benefit.