Towards the end of 2008, the Planning Commission approved the Integrated Energy Policy.Two critical elements of the policy are:

1. Price of all energy from all sources must be determined by markets.
2. It should be taxed differentially based on their negative externalities, mainly contributions to local and global pollution.

While the policy does not call for a complete end to subsidies, it does favour limiting their scope through better targeting. It will immediately raise the prices of some of the petroleum products, which are currently subsidised, because it demands removal of subsidies to a great extent, including, LPG and kerosene. It will also lower the price of petrol relative to diesel, since the two currently bear differential taxes.