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"If the minister's statement re oil cos flexibility to tweak diesel prices is the 1st step to price decontrol, then it's a bold & overdue step."
PARAS ADENWALA, PRINCIPAL PORTFOLIO MANAGER, CAPITAL PORTFOLIO ADVISORS, MUMBAI
"The announcement would be productive if in reality OMC would have freedom to raise price in line with international prices.
"This is conditional, we need to understand what is small quantity and what is over a period of time. Do companies really have the freedom to raise prices, or is it again government calling the shots?"
GAUTAM SINGH, ECONOMIST, ANAND RATHI SECURITIES, MUMBAI "Even a one rupee hike in diesel will lead to an 80 billion rupees reduction in subsidy. So, even a 10 rupee hike over a period of time, can have a 400-450 billion rupees impact on the fiscal deficit.
"However, it seems difficult to implement given that the government will face general elections in a year and half."
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
"The prevailing thought is there is certainly a sense of inevitability considering the huge subsidy burden and the need to maintain the fiscal deficit to GDP ratio at 5.3 percent. In that context, there is inevitability of upward price adjustment in petroleum prices. The magnitude and the timing will be worked out between the government and the OMCs. However, we await clarity."
A. PRASANNA, ECONOMIST, ICICI SECURITIES, PRIMARY DEALERSHIP LTD, MUMBAI
"It's kind of ambiguous. But if they're able to push through the increases over a course of six to seven months, it will improve the prospects for next year's fiscal deficit. However, it will be inflationary.
"This kind of signals there will be regular increases. It will push up inflation expectations, and will lead to second round effects."
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India permits state-run oil firms to raise diesel prices
(Reuters) State-run Indian oil marketing companies can now raise diesel prices in line with increases in global crude oil prices, Oil Minister Veerappa Moily said on Thursday, a move that could help the government reduce its vast subsidy bill.
"Oil marketing companies have been allowed to raise diesel prices in small quantities over a period of time," senior oil ministry official G. C. Chaturvedi said. He did not give details about the time-frame.
India's policy to subsidise retail prices