Hike in LPG and diesel to reduce subsidy bill: UR Bhat

In a chat with ET Now, UR Bhat, MD, Dalton Capital Advisors, shares his views on OMCs.
ET Now: Do you think a new regime could bring about a change in the sentiment for investors for OMCs as well and of course the regulations that govern them?

UR Bhat: Absolutely, if they are going to address the issue of subsidies, the highest amount of non-merit subsidies are being given to the consumers of diesel and cooking gas. So, if they have to really do something about the subsidy bill, they have to probably increase diesel prices and cooking gas prices pretty soon.

ET Now: Considering how inflation is, do you think that is entirely feasible raising diesel prices or LPG costs?

UR Bhat: If there is a new government, all the hard decisions have to be taken in the first one year, after that in India you have state elections everywhere. So, when there is a euphoria and you want to really ride this sort of reforms’ bandwagon, you have to do these things and that is what the market will like.

You can always put the blame on the previous government which did not do it for a long time so we have got to do this. The more the delay the more difficult it is going to be.