In the biggest wave of economic reforms since coming to power, the NDA government on Saturday de-regulated the price of diesel and announced a new price for domestically-produced natural gas.
The Government also announced the re-launch of the UPA’s flagship Direct Benefit Transfer Scheme for liquefied petroleum gas to benefit consumers denied subsidy for want of an Aadhaar number.
Breaking:Diesel, which now stands deregulated, will be cheaper by Rs. 3.37 starting midnight
>@the_hindu
— Mahim Pratap Singh (@mayhempsingh)
>October 18, 2014With the Cabinet decision, the price of diesel, like petrol, would now stand linked to the market without any government intervention, with retail rates reflecting price changes in the global market.
On gas pricing, the Government surprised analysts — who had been predicting revised prices in the range of $ 6-7/mmbtu (million metric British thermal units) — by fixing the price at $ 5.61 per mmbtu, 75 per cent lower than the rates proposed by the Rangarajan Committee under the UPA Government.
The immediate impact on diesel will be a reduction in prices by Rs 3.37 a litre (ex-Delhi) with effect from midnight Saturday.
Breaking: Govt rejects UPA's rangarajan formula on gas pricing;hikes gas price to $5.61/mmbtu from $4.62
>@the_hindu>pic.twitter.com/OqfPKu09kR
— Mahim Pratap Singh (@mayhempsingh)
>October 18, 2014Speaking on the Cabinet decision deregulating the price of diesel, Union Finance Minister Arun Jaitley said, “Henceforth, like petrol, the price of diesel would be linked to the market and therefore depending on whatever is the cost involved …the consumers will have to pay.” He was speaking to presspersons following the Cabinet meeting on Saturday.
On gas pricing, the major modification to the Rangarajan formula was the removal of the Japanese and Indian LNG import components. The move will fetch the exchequer additional revenue of Rs. 3,800 crore in higher royalties, 80 per cent of which will accrue to government companies.
In a related decision, the Cabinet approved a Petroleum Ministry note giving leeway in the production sharing contract that companies sign with the government, to monetise hydrocarbon discoveries faster. Cairn, Gujarat State Petroleum Corporation and ONGC will be among the immediate beneficiaries of the removal of red tape in the hydrocarbon exploration processes.