Subsidised auto and cooking fuel are definitely going to become passé, if Finance Minister P. Chidambaram’s statement on Wednesday is any indicator.
“The current level of subsidy (on petroleum products) is not sustainable,” he said adding that the current pricing system of petroleum product is not conducive for economic policy decisions. The Minister was addressing the valedictory session of the biennial Petrotech Conference here.
“With less than adequate pass-through, subsidies on these products (diesel, kerosene and LPG) have burgeoned. The problem is that these are clearly not sustainable and we must devise ways and means of correcting the price distortions,” the Finance Minister said.
Chidambaram’s statement comes at a time when the consumers are just coming to terms with the hike in diesel prices and a cap on the number of subsidised cooking gas cylinder available to each household. If Chidambaram’s statement gives little comfort to the consumers, he did not offer much to the public sector oil marketing companies also.
The oil companies after a record loss in the first quarter are preparing to announce financial results for the second quarter (June-September) without any compensation from the Government on account of selling diesel, domestic LPG and PDS kerosene below the cost price.
In fact, the Minister voiced concern on the widening of the current account deficit and rising subsidy bill that has increased the Government’s fiscal deficit. India imports about 75 per cent of its crude oil requirement.
“The single most fiscal risk not only to India but to all developing countries is the burgeoning subsidy bill. While some provision has been made under oil subsidy year after year, we have found that provision is always way off the mark as oil prices are globally determined,” Chidambaram said.
“Tighter product market, rising prices and growing demand could slow and indeed have slowed economic growth and has serious implications for the welfare of citizens and consequently a major challenge for the policy makers,” Chidambaram explained.
Appealing to oil producing countries not to engage in relentless price hike of crude oil, the Finance Minister said that the countries which have resources must exploit and sell at reasonable price to those who do not have or have just little bit.
shishir.sinha@thehindu.co.in
Keywords: Subsidised auto, cooking fuel, Finance Minister P. Chidambaram statement, current level of subsidy, petroleum products, not sustainable, current pricing, petroleum product, not conducive economic policy decisions, Petrotech Conference
Comments:
The FM is wise visonary and walks the talk and implementinf policy that saves Indias
down grade in rating is in National interest as it will lower the inflation in long
term.Also it is in line with the advise and opinion of prminent economist like Dr.Kirit
Parekh and Dr. Kelkkar Dr.Rangrajan and Dr. Montek and the PM.
The sooner he implements his vison the faster it will make the indian economy move
ahead and strengthen the value of rupee that is prime national interest.
The oil minster Mr Jaipal Reddy is never READY to act as he only has political vison
and not the national interest of the country to strengthen the economy but to retain
power for congress. In the upcoming resuffel of ministers Mr.Reddy must be moved
out of te oil ministry as he has not performed at all.
Level of subsidy may not be sustainable, but Level of Black money of
politicians in foreign banks is sustainable........
I am steam engine enthusiast. I would like to point out that there is
a steam engine designed by a Mr. Pritchard an automotive engineer of
Australia to meet the oil crisis in the 1970s. He took his steam
engine powered car to the United States of America and demonstrated
its efficacy and superiority over internal combustion engines to high
ranking US government officials and representatives. Then, oil prices
plummeted and his technology was not taken up. Steam I feel is the
promise of the future and if we tweak it, it will provide clean power
and good control over emissions as it is an external combustion
engine. In the 1930s, a steam powered aeroplane called the Bessler
steam plane made its debut. With the technology at hand we can sure
make the steam engine more modern and efficient and as it can use any
fuel it will be versatile and a lot more less polluting than IC
engines.
The Indian Government is not new to Fisical deficit and not new to giving comments that subsidy must go. If subsidy must go why not the taxation on the petroleum products be just the same across the country? the state tax, the central tax and so on and so forth? Mr.Chid...please hold back on comments as we as common man are paying more taxes in one form or the other...the simple fact is that if there is an increase in the prices for the petroleum products all other products and commodity prices will go up and the inflation will also..right? You guys are not being put in your positions to make the government rich...you have to make things and living standards to common man affordable. Are you doing something to increase the income of the common man? so that he can pay more taxes? no....looks like you are working for a commercial private organization and not the government..which is by the way a non-profit organization. The Cong Goverment is always pushing the country into debt.
Nitin N Varia (Mumbai)
The FM P>C>Chindambaram shall become the Harbinger of reforms if walks
the talk to rationalize the fuel tax and prices. He has the vison -
farsightedness and courage to walk the talk. This will bring cheers to
the country by strengthening the Rupees thereby lower the cost of
crude imports and thereby bring down inflation. Also making it more
transparent will mean less abuse to the Congress Government which by
virtue of having its control over Coal ie under ground - Spectrum ie
in space - and common wealth on Ground have become the major issue of
abuse. So it is time they let the system operate the petroleum sector
instead of at discretion of the ministers. A well envisaged petroleum
policy can work without the minister Mr. Jaipal Reddy to cry every day
with under recoveries and problem of LPG cylinder supplies. As a
matter of fact out of all mininsters Mr. Reddy is one minister who has
not performed at all in his tenure and only have been a protagonist of
the drama with regards to the under recoveries. He is a gentleman but
biased with politics and least regards to the economic well being of
the country and the threat of down grade meaning weaking rupee. If
congress need to win the next election they have to leave this sector
to operate transparently lest they will have a lot of problems.
I believe for private commercial vehicle users (who use within a small
radius), compressed air (future plan of Tata's) designed to accomodate 2
people will ease the burden on common man. The vehicle chasis along with
body can be made of carbon making the vehicle light. This introduction
will be a revolution for the Indian Mass, just as Maruti & Montana
changed the way of Cars on Indian Roads.
does goverment is really serious?
why it does not develop indias hydro energy potential?
200000 crore annual subsidary will result in nearly 20000mw hydropower
for free for india perenniallybut there is a catch as govt or private
players r less enthusiatic as once plant is made raw material is free-
WHERE WILL ONE GET KICKBACK IN IMPORTING OIL OR COAL??-THERE IS NO MONEY
TO BE MADE ONCE HYDRO PLANT IS OPERATIONAL-THATS THE REAL PROBLEM-WHO
REALLY CARES FOR INDIAS DEVELOPMENT BY THE WAY?
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