Jag Venugopal's Blog

June 25, 2010

A small victory for market forces

Filed under: India — Jag @ 6:47 am

It appears that the Government of India has got out of the business of subsidizing motor fuel prices. What a novel concept, and one coming just a couple decades after the collapse of that mecca of fiat pricing, the Soviet Union. Indian motorists can now pay the actual costs of their consumption without the distortion induced by either government subsidies or government cross-subsidies.

Unfortunately, the prices of kerosene (a common cooking fuel) and cooking gas are still immune to market forces. As prices of diesel and gasoline go up in lockstep with those on the global market, expect a lot more adulteration of these fuels with the still-subsidized kerosene. Additionally, expect a lot of cars to continue to be jerry-rigged to accept cooking gas as fuel.

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: