India lifts diesel controls, raises gas prices
Monday, 20 October 2014
NEW DELHI, Oct 18 (Reuters): India's government on Saturday lifted diesel price controls and raised the cost of natural gas, giving market forces greater sway as it seeks to attract energy investment, boost competition and cut subsidy costs.
The decisions marked an acceleration in reform measures by Prime Minister Narendra Modi, who won a landslide general election victory in May and was buoyed by a strong showing in two state elections this week.
Lower prices of diesel and a smaller-than-expected rise in local gas rates will help Modi fulfil an election pledge to curb inflation and pull India's economy out of its longest slowdown since the 1980s.
"Henceforth, like petrol, pricing of diesel will be market determined," Finance Minister Arun Jaitley told a news conference after Modi chaired a cabinet meeting.
A litre of diesel will cost about 5.7 per cent, or 3.37 rupees ($0.05), less for consumers from Sunday, while prices of locally produced gas will go up by a third from next month.