Oct 04: For the Indian oil & gas sector, the Modi government's decision to allow for market pricing of petroleum products other than LPG and kerosene is a welcome development.
8There are many spinoffs from it, including higher surpluses with oil companies for deployment into creating more productive assets
8It is important in this context to understand the theoretical underpinnings of the government's decision, particularly in the context of high retail prices resulting from a higher tax burden.
The website carries here data to show:
8Indian prices are not that high compared to those around the world
8The rise in excise duty rates over time
8Where are the additional resources garnered from excise duty hikes spent
8States share of revenues
Conclusion: The additional resources generated have been generously passed on to the states and the impetus to infrastructure improvement is visible. Funds committed for road,
 rail and urban infrastructure are much needed both for infrastructure up-gradation as well as their multiplier effect on the economy. This leaves no room for the government to yield to the demand for roll back of fuel prices at this stage, beyond yesterday's excise duty cut. It needs to be alive to this demand to ensure that should the crude prices harden any further, it should find a mechanism in consultation with states to maintain them at the present level.
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