Petrol and diesel is a commodity which is used by almost every Indian; and even if a person is not directly affected by fuels (example owns no vehicle), he or she is certainly indirectly affected by its usage.
Business and corporate sector of India is abuzz with the introduction of dynamic fuel pricing in India, something which has never been done before, but something which is pretty common in developed countries.
With this new protocol, you need to pay fluctuating prices of both petrol and diesel daily, based on the global crude prices and currency conversion rates.
As all the 4 major oil marketing companies which control 95% of oil retail in India, namely Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp have decided to implement it, effective May 1st, it is now certain that dynamic fuel pricing will become a reality in India.
Now, the question arises, how will this new form of fuel pricing affect Indians? Herein, we present 4 after effects of dynamic pricing in India, which India may soon witness:
The effect is certainly positive. First of all, with dynamic pricing, these oil companies would be able to forecast their revenues and losses well in advance, thereby eliminating any speculations from their quarterly report. Some analysts have described this decision as an act of independence, as no longer will these companies depend on fluctuating currency conversion rates to determine their profits.
Usually, oil companies maintain a hedge fund to absorb the difference in cost of global crude oil prices, and that of actual rates in which fuel is sold to consumers. This maintenance and expense of hedge funds will decrease, which will lead to an increase of 5-7% in revenues.
Besides, Govt. may soon integrate all 4 oil marketing companies into one, which will now become easier due to dynamic pricing.
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