- Consumers:
- Consumers pay market prices for fuel (e.g., petrol, diesel).
- They receive direct subsidy for LPG (up to 12 cylinders).
- For kerosene, central subsidy is eliminated, but state subsidies may exist.
- Deregulation means prices fluctuate with global crude oil prices.
- Economy:
- Reduces the fiscal burden on the government.
- Can improve market efficiency by allowing prices to reflect true costs.
- Reduces distortions in consumption patterns.
- Can reduce import dependency if higher prices curb demand.
- However, higher fuel prices can contribute to inflation (cost-push).