ScienceGuy

Petrol prices were market-linked in 2010 and diesel later in 2014 for retail consumers. Although I do encourage and support this move as they would improve fiscal balance, make energy usage more sufficient and would be better for the environment as well.

India is a net importer of energy, with High-Speed-Diesel playing a central role in India’s energy dynamics. Due to this, diesel prices were passed in a controlled manner and distributed asymmetrically between favourable and unfavourable shocks.

EXPECTATIONS IN AS -  INFLATION We have already incorporated expectations of the price level into the model.