India deregulates petrol prices

India’s government decided to deregulate petrol prices in a bold economic reform that risks a popular backlash as the country struggles with double-digit inflation. The step, which will mean an increase in fuel prices, is part of efforts by the left-leaning Congress-led government to reduce a widening budget deficit by reducing the massive subsidies it pays to state-run fuel companies. “The price of petrol will be market determined,” Oil Secretary S. Sundareshan announced, adding that petrol prices would rise by Rs3.5 (US$0.08) per liter, or 7%, and diesel fuel prices by Rs2 (US$0.04) per liter, or 5%, at midnight. Diesel fuel prices will also be deregulated but no time frame has been set, he said, adding that the government would keep its right to intervene if global crude prices soar. The prices of cooking gas and kerosene will remain state-subsidized but will also rise, a panel led by Finance Minister Pranab Mukherjee decreed. (June 26, 2010)