The central government has permitted oil companies to fix the price of diesel and this has resulted in its price being hiked by 45 paise with effect from January 17. In, turn the price of petrol has been cut by 25 paise. The aim of the central government with this step is to reduce a massive subsidy bill which it is footing on diesel and ultimately deregulate the prices.
The state-owned oil companies have been permitted to raise the price of subsidised diesel by around 50 paise every month and gradually reducing the difference between petrol and diesel prices. The move is expected to help the help the oil companies cut the loss of around Rs 9.60 that they suffer on every litre sold.
There won’t be any immediate impact on cars sales, but the buyer sentiments are expected to change and demand for petrol cars should go up once again. It will also lead correction of prices of the diesel variants in long run. Also now that the government stand on diesel is little clearer, we can expect proper announcement from car manufacturers confirming their long-term investment plans for diesel technology development and engine facilities.
