Petroleum Product Pricing Reforms in India: Are We on the Right Track?

The path to petroleum product pricing reforms in India has been full of undulations. Even though Administered Pricing Mechanism (APM) was dismantled during 1 April 1998 to 31 March 2002, the government continued to regulate the prices of petrol, diesel, Public Distribution System (PDS) kerosene, and domestic LPG, except for over a year, when oil marketing companies (OMCs) revised the consumer prices of petrol and diesel in line with the international prices. In June 2010, petrol pricing was deregulated, but government control continued to an extent. This control of petroleum product prices has not only severely affected the fiscal balance of the economy, but has also adversely impacted the oil companies (both upstream and downstream), eventually affecting the overall development of the sector. In fact, the impact of petroleum product subsidies has compelled the government to announce certain reforms in the past few months.