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India: the price isn't right

Low crude prices could have allowed the Indian government to reform its domestic price-fixing regime, but political factors are likely to prevent such a change, reports James Gavin

India may have missed its chance to take advantage of low oil prices to ease domestic fuel-price subsidies. With elections taking place this month and next, reform of the pricing system is unlikely – politicians are loath to enact policies that would prove unpopular. Cooking gas (liquefied petroleum gas – LPG) and kerosene, the main fuels used by the hundreds of millions of India's low-income population, are heavily subsidised to ease the burden on the poor; while retail prices for gasoline and diesel are capped to help contain inflation. India is the world's fifth-largest consumer of energy – oil products demand rose by 7.6% during the 2008-09 fiscal year. But with domestic crude producti

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