Abstract
The retail price of petrol, diesel, liquid petroleum gas (LPG) and other energy products in India is a complex mixture of crude prices, taxes and subsidies by the central as well as state governments. In this paper, we discuss the break-up of these components of pricing. The discussion is set in the background of international pricing mechanisms and recommendations of international agencies such as the International Institute of Sustainable Development and the International Monetary Fund. The main point that emerges from the discussion is that since these products are necessities with very low elasticity of demand, incidence of taxes and/or subsidies on these products are almost 100% making them ideal tools for the international cartels (seeking profits) and local governments (seeking revenues) to maximize their pecuniary benefits from the manipulation of such prices. The complex formula leading to the retail price is a corollary of these interests.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
- 2.
- 3.
Individual crudes have a particular yield of products with a gross product worth (GPW). GPW depends both on the refining process and the prices at which these products are sold.
- 4.
- 5.
- 6.
Except the northeastern states (with the exception of Assam) where industrial power tariff is also significantly subsidized.
References
Abouleinein, S., El-Laithy, H., & Kheir-El-Din, H. (2009). The impact of phasing out subsidies of petroleum energy products in Egypt. Egyptian Center for Economic Studies, Working Paper No. 145.
Argus Media Website. Various reports. Retrieved from http://www.argusmedia.com/. Accessed on July 15, 2015.
Census of India’s. (2011). Provisional population totals of rural-urban distribution in the country, released by Union Home Secretary R.K. Singh. Retrieved from http://censusindia.gov.in/2011-prov-results/paper2/data_files/india/Rural_Urban_2011.pdf. Accessed on December 02, 2014.
Danielsen, A. (1982). The Evolution of OPEC. New York: Harcourt Brace Jovanovich.
Essama-Nssah, B., Delfin, S. G., Kearney, M., Korman, V., Robinson, S., & Thierfelder, K. (2008). Economy wide and distributional impact of an oil price shock on the South African economy, The world bank and institute of development studies. Retrieved from http://siteresources.worldbank.org/INTPSIA/Resources/490023-1171551075650/3457768-1241469484668/AFRI_485-530_ch12.pdf.
Financial Times. Retrieved from http://www.ft.com/cms/s/0/517b2aa4-0acd-11e5-9df4-00144feabdc0.html#axzz3sCckeV74. Accessed on July 05, 2014.
Grave, K., Hazrat, M., Boeve, S., von Blücher, F., Bourgault, C., Breitschopf, et al. (2015). Electricity costs of energy intensive industries—An international comparison, for the German ministry of economic affairs and energy. Retrieved from http://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015-electricity-costs-of-energy-intensive-industries.pdf. Accessed on December 02, 2014.
Handbook of Statistics on Indian Economy. RBI. Retrieved from https://www.rbi.org.in/scripts/annualPublications.aspx?head=Handbook+of+Statistics+on+Indian+Economy. Accessed on December 22, 2015.
Handbook on Direct Benefit Transfer for LPG Consumer (DBTL). Ministry of petroleum and natural gas, government of India. Retrieved from http://petroleum.nic.in/dbt/DBTL_Handbook.pdf. Accessed on December 02, 2014.
Hindustan Petroleum Corporation Limited Website. Retrieved from http://www.hpretail.in/documents/pdf/pb/pricebuildup_Diesel.pdf and http://www.hpretail.in/documents/pdf/pb/pricebuildup_Petrol.pdf. Accessed on December 02, 2014.
IEA. World energy outlook 2011. Retrieved from http://www.worldenergyoutlook.org/weo2011/. Accessed on November 25, 2013.
IEA. World energy outlook 2012. Retrieved from http://www.worldenergyoutlook.org/weo2012/. Accessed on June 20, 2014.
Indexmundi Statistics. Retrieved from http://www.indexmundi.com/. Accessed on March 22, 2016.
India in Figures. (2015). Government of India, ministry of statistics and programme implementation. Central Statistics Office, Research & Publication Unit, New Delhi. Retrieved from http://mospi.nic.in/Mospi_New/upload/India_in_figures-2015.pdf. Accessed on December 20, 2015.
Indian Express Articles. Retrieved from http://indianexpress.com/article/business/commodities/fm-time-to-remove-lpg-subsidy-for-people-like-us/. Accessed on December 02, 2015.
Indiastat Website. Various documents and reports. Retrieved from www.indiastat.com. Accessed on July 18, 2015.
Inter-governmental Panel on Climate Change. Various documents and reports. Retrieved from www.ipcc.ch. Accessed on July 18, 2014.
Labour Bureau. Government of India. Retrieved from http://labourbureau.nic.in/indtab.html. Accessed on December 22, 2015.
Mabro, R. (1984). On oil price concepts, oxford institute for energy studies, WPM 3. Retrived from https://www.oxfordenergy.org/wpcms/wp-content/uploads/2010/11/WPM3-OnOilPriceConcepts-RMabro-1984.pdf . Accessed on July 18, 2014.
Ministry of Power. Government of India. Retrieved from http://powermin.nic.in/upload/loksabhatable/pdf/LS19032015_Eng.pdf. Accessed on July 18, 2014.
Moneycontrol Website. Retrieved from http://m.moneycontrol.com/news/economy/need-to-dealdiscom-losses-onstate-level-expert_1506161.html. Accessed on July 18, 2014.
Moorthy, V., & Kolhar, S. (2011). Rising food inflation and India’s monetary policy. Indian Growth and Development Review, 4(1), 73–94.
NSS 66th Round. Report No. 537: Employment and unemployment situation in India, 2009–10. Retrieved from http://mospi.nic.in/mospi_new/upload/nss_report_552.pdf. Accessed on December 02, 2014.
OPEC Website-various Reports. Retrieved from http://www.opec.org/opec_web/static_files_project/media/downloads/publications/MOMR%20February%202016.pdfand http://www.opec.org/opec_web/en/data_graphs/40.htm. Accessed on July 05, 2015.
Soni, A. (2014). Global oil markets and India’s vulnerability to oil shocks, the energy and resources institute TERI-NFA working paper series No. 18. Retrieved from http://www.teriin.org/projects/nfa/pdf/working-paper-No18-Oil-volatility.pdf. Accessed on July 18, 2014.
Sriring, O. (2011). Thailand may remove oil subsidy as fund runs out. Retrieved from Reuter’s website http://in.reuters.com/article/2011/03/04/thailand-economy-subsidy-idINSGE72302F20110304. Accessed on October 23, 2012.
Swain, A., & Charnoz, O. (2012). In pursuit of energy efficiency in India’s agriculture: Fighting ‘free power’ or working with it? AgenceFrançaise de Développement, working paper 126. Retrieved from http://www.afd.fr/webdav/shared/PUBLICATIONS/RECHERCHE/Scientifiques/Documents-de-travail/126-document-travail-VA.pdf. Accessed on July 18,2014.
Talkenergy Website of WordPress.com. Retrieved from https://talkenergy.files.wordpress.com/2011/02/asean-electricity-tariff-2011.pdf. Accessed on July 18, 2014.
The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth. Planning Commission, Government of India, April 2014. Retrieved from http://planningcommission.nic.in/reports/genrep/rep_carbon2005.pdf. Accessed on July 18, 2014.
The National Newspaper Article. Retrieved from http://www.thenational.ae/business/economy/energy-subsidies-prove-drain-on-indian-economy. Accessed on July 20, 2015.
US Environment Protection Agency. Various documents and reports. Retrieved from http://www.epa.gov. Accessed on July 18, 2014.
United Nations Conference on Trade & Development, Various reports accessed at http://unctad.org/en/Pages/Statistics.aspx. Accessed on July 18, 2015.
World Economic Outlook 2007 published by IMF. Retrieved from https://www.imf.org/external/pubs/ft/weo/2007/02/pdf/c4.pdf. Accessed on December 02, 2014.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer Nature Singapore Pte Ltd.
About this chapter
Cite this chapter
Ganguly, A., Bhattacharyya, R. (2019). Pricing of Energy Goods in India: How Is It Done?. In: Bandyopadhyay, S., Dutta, M. (eds) Opportunities and Challenges in Development. Springer, Singapore. https://doi.org/10.1007/978-981-13-9981-7_14
Download citation
DOI: https://doi.org/10.1007/978-981-13-9981-7_14
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-13-9980-0
Online ISBN: 978-981-13-9981-7
eBook Packages: Economics and FinanceEconomics and Finance (R0)