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Implication of Fuel Price Deregulation on Fuel Demand and CO2 Emission: A Case Study of Car Ownership and Utilisation in India

By Kaushik Ranjan Bandyopadhyay

Abstract

India’s road transport is characterised by a historical asymmetry in the auto-fuel prices due to lack of parity between international and domestic fuel prices and artificial deflation of domestic diesel price relative to that of petrol through differences in levies. This continued to provide a constant fillip to ownership and utilisation of personalised vehicles leading to higher energy consumption with negative spill-over on the environment. In this backdrop, the paper builds up a time series econometric model of car ownership and utilisation in India and examines the possible implication of price-deregulation and removal of price asymmetry between petrol and diesel for future energy saving and curtailment of CO2 emissions for an on-road car.transport; fuel prices; fuel consumption; CO2 emissions

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