(This article was originally published on October 6, 2014) NEW DELHI: Fuel revenue loss in July-September started from Rs 9, 037 in the previous quarter Rupees suddenly dropped to Rs 2, 71.2 crore, Diesel has brought unexpected wealth to the government. Rupee (fall in global oil prices). It has softened significantly. The situation has improved in the current quarter as fuel prices are Rs 2 higher than market prices. State-owned companies want the government to delay the expected diesel price cut to make up for past losses.

Diesel has become so profitable for Indian refiners that the price of Brent crude has surged to 116 since the start of the month from 6 The dollar has fallen more than 20% since last week’s 5% drop. It then closed at a 27-month low of $92.31 on Friday. As of the beginning of the current fiscal year, the total fuel subsidy for kerosene, cooking gas, and diesel fuel for 2014/15 is estimated to be Rs. 1,271.65 billion.

This amount has come down to Rs 84, 317 crore giving the finance minister an unexpected wealth of Rs 48,000 crore increasing the prospects of achieving the 4.1% target of fiscal deficit to GDP this year. After nearly a decade of declining fuel imports,99 diesel prices rose by 35 paisa over market prices in mid-month. The increase increased to Rs. 2 per liter this month, but the government did not reduce the retail price. According to official sources, one of the considerations for postponing the decision was that the Election Commission might object, as polls were to be held in two states. The government is reluctant to immediately loosen diesel price controls, which could not only have political implications for price spikes later this year, but also expose state-run oil marketing companies to stiff private competition.

A decade ago, when fuel prices were determined entirely by the market, Reliance Industries, Essar Oil and Shell India had a market share of about 17 percent in the public sector. Subsequently, the government began subsidizing the retail price of petrol and diesel sold by state-owned companies, preventing private companies from participating in the retail fuel business.

Later, in June 2010, the UPA government decided to deregulate petrol and diesel, but failed to implement it. In January last year, under the same regime, oil companies were allowed to increase the price of diesel by about 50 paisa per month, which, coupled with the fall in international oil prices, led to a significant over-recovery in diesel sales.

These two factors have helped reduce the burden of government support for fuel costs. If the government delays the fuel price cut further by October 15, the diesel subsidy for the last fiscal is expected to be around Rs 6,300 crore, much lower than Rs 1,000 crore in the current fiscal, sources said.