Previous Year Question

In India, the prices of petrol and diesel are determined by Oil Marketing Companies (OMCs). The major public-sector companies include Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL). These companies have been authorised to determine petrol and diesel prices according to market conditions.

The Government of India deregulated petrol prices on 26 June 2010 and diesel prices on 19 October 2014. Before deregulation, the government played a more direct role in determining their retail prices. Following deregulation, oil companies began taking pricing decisions based on international market conditions and commercial costs.

The retail prices of petrol and diesel are influenced by the international prices of the corresponding petroleum products, the rupee-dollar exchange rate, transportation costs, marketing expenses, and dealer commissions. Additionally, the Central Government's Excise Duty and the State Governments' Value Added Tax (VAT) affect the final retail prices. Consequently, prices may vary across different states.

The Ministry of Petroleum and Natural Gas is responsible for policies and administration relating to the petroleum sector, while State Governments determine VAT on petrol and diesel. However, the prices of all petroleum products are not completely deregulated. The government has continued to play a role in determining effective consumer prices for products such as domestic LPG. Thus, in the context of 2015, oil companies held primary responsibility for determining petrol and diesel prices.