ANALYSIS

1.The Indian government has said that gasoline and diesel prices will
now be market-determined as the government seeks to shrink its
budget deficit and help state-run marketing companies cut losses on
selling fuel products at state-set prices.
2.
3.The deregulation will lead to INR3.5 per litre increase in the price
of gasoline, while the price of diesel will go up by INR2 per liter
as of now.
4.
5.It's a game changer for Indian companies. Refiners Reliance Industries
and Essar are to compete with state-run firms for retail market
share
6.
7.Private companies will now compete with state run companies to sell
their products.
8.The Big Rider.
 EFFECTS
1)   Inflation will rise.

2)  Interest rates

3)   Private sector oil companies and oil marketing company’s margins

will rise.

4)   Fiscal deficit will be contained but all depend on the monsoon

which so far has had unsatisfactory progress.

5)   Hedging
Demand and Supply curve
S

P2
SHORT RUN CURVE
P1
Price

Qd Q Qs

Quantity
 Long Run Curve
S2

S1
P2
P1
Price

D1

D2

Q2 Q1

Quantity