The step taken by Govt by allowing Oil Marketing Companies to increase the Diesel prices in small amount over next 10 Months will reduce the fiscal deficit gradually and the full impact will come in FY 14 . Govt will save subsidy of INR 12000 crores through this step per year .
Giving power to Oill Company for diesel price hike in the same manner as done earlier for Petrol is definitely a bold step . We hope govt will not influence the price decison of the Companies as they have done in the past in the case of Petrol .
Even after this decison and price increase Govt subsidy will continue @ INR 5/- per liter .
Few days back Govt had allowed Oil companies to sell Bulk diesel at market price .
Both stock market and FX market has taken this deciosn very positively . Yesterday INR appreciated to 54.30 level and today it has gone below 54 level to 53.80 , Although it is sentiment driven and may not stay long at this level in the long run any improvement in fiscal deficit will be positive to INR .
The negative side is that Diesel price will have its impact on Inflation which is in reducing trend and has recently touched a three year low level at 7.18% ( Dec 12 ) .
Credit Rating agency will take the Govt decison very positively due its positive impact on fiscal deficit reduction .
India is expected to close FY 13 with a fiscal deficit of 5.5% ~6% of GDP
Giving power to Oill Company for diesel price hike in the same manner as done earlier for Petrol is definitely a bold step . We hope govt will not influence the price decison of the Companies as they have done in the past in the case of Petrol .
Even after this decison and price increase Govt subsidy will continue @ INR 5/- per liter .
Few days back Govt had allowed Oil companies to sell Bulk diesel at market price .
Both stock market and FX market has taken this deciosn very positively . Yesterday INR appreciated to 54.30 level and today it has gone below 54 level to 53.80 , Although it is sentiment driven and may not stay long at this level in the long run any improvement in fiscal deficit will be positive to INR .
The negative side is that Diesel price will have its impact on Inflation which is in reducing trend and has recently touched a three year low level at 7.18% ( Dec 12 ) .
Credit Rating agency will take the Govt decison very positively due its positive impact on fiscal deficit reduction .
India is expected to close FY 13 with a fiscal deficit of 5.5% ~6% of GDP
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