ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fuel Pricing Policy Reform in India: Implications and Way Forward

This paper undertakes an examination of the differential impact of international oil prices on domestic inflation and output growth in India under two alternative scenarios. One scenario is, when domestic fuel prices are allowed a formula-based automatic alignment with international oil prices and the second, when as per current policy, fuel prices have evolved as a consequence of revisions specified periodically by the government. The differential impact analysis has been undertaken in a structural Vector Autoregressive framework using the technique of innovation accounting.

 

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