Petroleum and natural gas minister Veerappa Moily on Friday said his ministry was yet to take a view on the Kelkar committee proposal to raise diesel prices in a calibrated manner, leading to full deregulation by 2014-15 to reduce the oil subsidy burden. ?The ministry is studying the recommendations of the Vijay Kelkar committee that has suggested de-regulation of diesel prices while increasing its retail price in phases. We are yet to process and finalise view on this issue,? Moily said at a conference organised by Assocham here.
Many economists had favoured the formula of monthly increase in diesel prices, saying that this would ultimately help curb inflation. India’s oil subsidy for 2012-13 is estimated at R1.67 lakh crore. Since nearly four-fifth of the oil consumed or processed in the country is imported, the global crude prices (which remained at a somewhat elevated level of $110 a barrel even though lower than last year’s) and a weak rupee are contributing to the spike in the subsidy bill. A stagnation in domestic oil production is aggravating the scenario.
Among other things, the Kelkar panel which laid down a new three-year fiscal consolidation road map had also recommended removal of LPG subsidies in three phases by 2014-15 and reduction of kerosene subsidy to a third of the current levels. These proposals, however, were politically unpalatable for the government and the finance ministry has in fact conceded this.
Kelkar had said the failure to curb subsidies could see a flight of foreign capital and a potential downgrade by rating agencies. The finance ministry, however, said that comment was about a ?do-nothing? situation and later announced a five-year fiscal consolidation rad map, intending to bring down the fiscal deficit to 3% by 2016-17.
To make the country self-sufficient in fuel, Moily has recently approved the proposals from Reliance Industries and Cairn India to explore oil and gas within their producing fields subject to conditions.
