According to The Times of India, Reliance Industries , the largest publicly traded company in India has shut down all of its petrol dispensing stations. The reason being, in this world of high energy prices, it cannot compete with the highly subsidized prices of petrol and diesel from the state run Indian Oil, Bharat Petroleum and Hindustan Petroleum.
Also according to the article, these state run companies sells petrol at a loss of Rs 13.97 a litre and diesel at a discount of Rs 20.97 per litre. This revenue loss is made up by the Government through issue of oil bonds and subsidy share from upstream firms like ONGC and GAIL.
So in essence the Government of India is borrowing money to keep the prices of Petrol and Diesel artificially low. Where is the business sense in this? I am sure that with the coming parliamentary elections next year, the current government is not going to hike the fuel prices as this will be hugely unpopular among the electorate. If at all there is a fuel price hike, then the opposition will use it as a leverage against the current government and manipulate it meet its own needs.
Alas, most of our fiscal policies are dictated by politics and desire to cling to power rather then sound economic judgement and doing what is right.
Read more at Reliance Shuts Petrol Dispensing Stations
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