India’s Supreme Court rules in favor of deregulating diesel fuel prices for bulk consumers

India’s Supreme Court has endorsed the government’s decision to charge market prices for diesel fuel sold to bulk buyers such as the military, railways and transport corporations, The Economic Times reported.
Last January, the government announced that diesel prices would be raised every month and bulk consumers will not be able to avail of subsidized diesel fuel. Transport corporations challenged the move in the Madras, Kerala and Andhra high courts.
The recent decision of India’s highest court, although only a partial victory, is a boost for the oil industry, which is dominated by publicly owned corporations. India’s Oil Ministry has faced several legal challenges against key pricing decisions for oil and natural gas.
“The national pricing policy is being sought to be dislocated. If this is done, oil companies will not be able to survive (under the load of subsidies),” argued Attorney General G.E. Vahanvati.
Justices R.M. Lodha and Madan B. Lokur ruled in favor of the government, saying that the rationale for raising the prices of petroleum products in a phased manner was a sound policy.
“Oil is important. But the rupee value is going down, there’s a huge current account deficit. What will be the impact if prices are pegged at earlier currency rates? Oil has to be imported. We can’t ignore this fact. You can’t expect subsidies to be continued forever. Ultimately the economy has to survive,” the two-judge bench said.
However, petitions challenging diesel price decontrol and raising natural gas prices are still pending in the court.