The cut in oil prices has evoked mixed response from the industry chambers. Chambers FICCI and CII welcomed the move but said that the decision would hurt oil companies badly while Assocham said the cuts will benefit customers and curb inflationary trends.FICCI said the reduction in retail oil prices would help contain prices of essentials and bring relief to petrol and diesel consumers. However, the reduction would hurt oil companies which are already smarting under pressure from reduced margins.The chamber said that the government should take a long term view as the current arrangement of burden sharing between the government, oil companies and consumers was unsustainable in the long run.Echoing a similar view, CII, said that the fuel price reduction would be good for the consumer but oil companies would have problems of contending with under-recoveries related to diesel."Oil companies are already losing 41 paise per litre. This will get accentuated with this reduction," said V Raguraman, Principal Advisor (Energy), CII.CII has recommended that the government should follow Rangarajan Committee Report. "It should follow the formula for changing over to trade parity prices and rationalize state taxes. Government should make all oil products veritable and switch over to GSA by 2010," Raguraman added.Assocham on the other hand contends the reduction in prices is totally justified. "A couple of months ago, the government hiked prices of petrol and diesel in view of hardening of crude oil prices globally, so it is natural that government has decided to curtail domestic oil prices now when crude oil prices have softened internationally," Assocham President, Anil K Agarwal, said.The industry body has also suggested that the government should empower its oil marketing companies to independently increase and decrease the prices of petroleum products as and when the international oil scenario calls for it.
