| Abstract: | Deregulation of petroleum product prices has been considered for quite some time in India. Such a policy is compatible with the idea of a liberalized economy and reduced government intervention. However, little progress has been made so far, due to various issues that loom over the deregulation process. This paper analyses issues related to deregulation of petroleum product prices, clarifies certain conceptions or misconceptions, and studies the options available for a deregulated price environment. It is argued that the equity and environmental effects of kerosene use need to be borne in mind, and a simple cross-subsidy system to this effect is proposed. For all other products, a deregulated system with some safeguards may be feasible. The success of any such attempt, however, needs some institutional rearrangements. |
