petro price hike still alive

11 Feb 2010

PETRO PRICE RISE STILL ALIVE

From Our Delhi Bureau

NEW DELHI: The Union Cabinet on Thursday steered clear of discussing increase in prices of petrol, diesel and petroleum products, but the issue is not completely shut.

As a sequel to the Congress leadership refusing to give a political nod for a straight-away increase, Finance Minister Pranab Mukherjee and Petroleum Minister Murli Deora will meet here on Sunday to study the financial aspects of recommendations of the expert group headed by Dr Kirit Parikh on petro prices.

They will be basically considering full deregulation of petrol and diesel prices hanging fire for almost 10 years and recommended once again by the Parikh panel. It requires a policy decision since it will reverse the government-administered fuel prices always practised in the independent India.

Indications are that Mukherjee may incorporate the deregulation drill in the Union Budget on February 26.  To scuttle any opposition by the allies, the Cabinet approval necessary for the policy shift may be taken just two hours before he unveils the budget in Parliament.

The shift will ease the government's mounting oil subsidy bill and improve financial health of the public sector oil companies who have to bear the burden partially, though the consumer will lose stability of fuel prices as they will fluctuate alike prices of other commodities in the market.

Mukherjee and Deora will be also discussing increases in the domestic LPG (liquefied petroleum gas) or cooking gas and kerosene recommended by Dr Parikh, but indications are that these will be rejected to avoid any burden on the common man.

Home Minister P Chidambaram, who briefed media on the Cabinet decisions, said the Parikh panel report did not figure in the meeting, nor did Deora bring any cabinet note for discussion as widely speculated.

The Cabinet, however, accepted the 13th Finance Commission's report on the Centre-state fiscal relations for five years from 2010-2015 defining the states' share in the central taxes. Chidambaram said it also decided to lay the commission's recommendations and the government's action taken report in Parliament in the ensuing budget session.

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