[Economy Q] Deregulation of Petrol prices : Pros, Cons, consequences

[Economy Q] Deregulation of Petrol prices : Pros, Cons, consequences

nforninad asked

pros and cons of "Deregulation of petrol"

Ans

Pros

1. As petrol becomes expensive, the college kids waste less of it, loitering around on their bikes.
2. Middle-class people start using public transport systems instead of their private vehicles = less air & noise pollution and traffic congestion during peak hours.
3. Less subsidy burden on tax-payers, who are not using petro-vehicles otherwise.(theoretically)
4. People switch to CNG based vehicles = less pollution.

Cons

1. As petrol becomes expensive, rickshaw fares increase. So you end up wasting lot of time waiting for the bus or wasting more money on rickshaw.
2. Cost of everything that is transported by petro-vehicles, also increases.
3. Erratic public transport system (buses and railways) creates problem in reaching at office / school /college on time = negative-effect on nation's productivity.
4. Deregulation of petrol doesn't directly mean that Government will reduce taxes, they'll simply start diverting that subsidy-money to something else like NREGA where again their cronies loot it via ghost muster rolls and fake ration cards. So better you and me misuse the subsidized petrol then let them enjoy the subsidy money!
5. If petrol becomes expensive People start preferring to buy diesel vehicles. So recession in petro-vehicle sector and boom in diesel vehicle sector.
6. People start buying electricity-based cars and scooters but where does that electricity come from?? if from coal based thermal power plant, then again it'll lead to more pollution.
7. Petrolpump owners will start adulterating more kerosene in petrol, to increase their profit margin, while vehicle-engine efficiency decreases.
8. The theoretical assumption that as petrol becomes expensive, businessmen will start investing in clean energy: doesn't hold much water in India, as the required infrastructure and Government  support for research in clean energy technology is bare minimum, compared to USA etc.

Can you add any more..well do post them in comments!

Related to this,

 http://venkateshias.blogspot.com/2011/03/economy-4-newbie-petrol-diesel-lpg.html