4 years, 3 panels: No end to oil trouble
Hyderabad, Feb. 3: Four years after assisting Mr C. Rangarajan in drawing up suggestions for resolving the the oil industry’s problems, Mr Kirit Parikh has now submitted another report on the same subject. The only difference this time seems to be that he was heading the committee.
In the interim, one other committee, headed by Mr B.K. Chaturvedi, also submitted its recommendations for the petroleum industry.
Going by past experience, oil industry officials and analysts say that the key recommendations of the Parikh committee are unlikely to be implemented. Petrol prices may be hiked as it is a relatively less sensitive item compared to the other three — diesel, kerosene and LPG, say industry sources.
Industry watchers say that there is nothing in the Parikh committee report which is not known. This is the third report on the subject that has come out in the past four years, says an oil company official. That the oil companies are losing money on sales of diesel, petrol, LPG and kerosene is known. That deregulation of the sector is the only long term option is also known.
However, the government hasn’t been able to muster the will required in the past five years — whether something has changed this time remains to be seen. From the face of it, the government’s options are limited.
The government is always in a dilemma on what to do, because of inflation and fiscal deficit, says an economist. Inflation, the rate at which prices are going up, currently stands at 7.31 per cent. Rise in food prices is even higher — closer to 20 per cent. Kerosene and LPG are cooking fuels and a hike in these prices will immediately be felt by consumers. Diesel is a transport fuel, so a price hike here may push up prices further. However, fiscal deficit — the difference of government’s expe-nses over its income — is also expected to be at seven per cent, which is high. The oil subsidy bill of over Rs 40,000 crore — 0.8 per cent of the GDP, will push it up further. The high fiscal deficit is one reason why the government is selling stakes in public sector enterprises. The government is likely to absorb most of this subsidy in the fiscal deficit, instead of passing it to consumers, feels the economist.
Age Correspondent
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