The intent to introduce ‘dynamic fuel pricing’ seems more political than anything else. As a concept it is not new to the world, but should India adopt everything that the West does is the question, given the vast dealer network which petroleum retail has.
For consumers daily review of petrol and diesel prices will be like buying potatoes that could see a price variation between morning and evening. The oil marketing companies will face no practical glitches as they anyway review prices on a daily basis, and average it out for fortnightly revision.
However, the dealer network, on which the petroleum retail business of the country is dependent, will be at the receiving end. The issue is how prepared they are, technically; the country may end up with a situation akin to the cash crunch as ATMs which were not recalibrated to meet the specifications of the new notes.
Who benefits? The government. How? It protects itself from any political backlash or agitations due to revision of fuel prices. Under the deregulated pricing regime, the oil companies are free to revise prices at their discretion. Currently, the revision is done on a fortnightly basis, which at times results in price increase of over ₹2 a litre depending on the global benchmarks.
Any revision above a rupee always attracts attention of the Opposition. It becomes a political issue, more so with elections around the corner. If done on a daily basis, it would not hurt the consumer as the variations could be in paise terms.
The seeds of daily revision have already been sown and the government wants to do a pilot, initially. Before it takes off, dealers need to be well-equipped so that dispensing units can be re-set everyday. They will also need to ensure that they have enough manpower to manually change prices, and prepare themselves for proper accounting as prices will have to be calculated depending on the logistics. Instead of going for a daily revision immediately, it is better to start on a weekly basis, then to every three days, and finally a daily revision, therefore giving time to dealers to prepare.
Chief of Bureau, Delhi