Diesel price cut to reduce WPI by 20bp in next two months - Motilal Oswal

Mumbai: Diesel deregulation would result in a sharp fall in diesel inflation to 4 percent from 13 percent by December 2014, says Motilal Oswal.

This paves the way for a sharper decline in inflation indicators, ahead of expectations.

RBI may cut rates 2-3 quarters ahead of consensus expectations on the back of these developments, says Motilal Oswal, adding that the government would be able to limit the oil subsidy bill within the budgetary target of 634 billion rupees.

The government's fiscal deficit target of 4.1 percent is now more credible, Motilal Oswal says.