Partly deregulated oil price regime may be in the works: oil min sources

India is likely to introduce market pricing of fuels which will help ease the subsidies burden on a government trying to strike a balance between growth and fiscal prudence. It will also help firms like Reliance Industries to revive their retail networks.

According to oil minister Murli Deora the cabinet would consider a proposal to free state controls on fuel prices. He said the proposal would go to the cabinet and will be discussed within six weeks. He was speaking soon after being re-appointed oil minister.

Shares of companies in the exploration and oil refining sectors surged on Deora's announcement, which  was interpreted as a sign of a likely approval.

The oil and sector index, which includes Reliance and public sector explorer ONGC rose 4.6 per cent, out-performing the 30-share BSE index.

Meanwhile, oil prices continued to rise touching $65 a barrel on Friday and according to analysts, the market trend remained bullish in the broader macroeconomic context.

Analysts point out that the rising oil prices could hit fiscal calculations for India given its oil import budget for the 70 per cent of the oil it consumes. India has also accumulated a massive burden of subsidies as it regulated prices when the commodity shot to $150 last year.