Petroleum Pricing in India: Transition from APM to MDPM

Given the paramount importance of petroleum for the Indian economy and its increasing import dependence on this front, domestic pricing of crude oil and petroleum products assumes enormous significance for the country. The pricing regime not only influences the cost of energy for the economy as a whole but also has significant implications on economic growth and welfare. A close look at the pricing regime in the petroleum sector in India reveals that for nearly two and half decades (from 1975 to 1997) the petroleum sector in the country was operating in a state of complete protection under Administered Pricing Mechanism (APM). It is only in 1998 that the sector embarked on a gradual transition to a regime of deregulation and open competition. The paper provides an in-depth examination of the domestic pricing regime for crude and petroleum products in India under APM and in the post-APM era.