The Cabinet today approved a Planning Commission-drafted Integrated Energy Policy which aims to make energy prices market determined and target subsidy to below poverty line users.
The Cabinet’s approval comes amid reports of the government considering freeing petrol and diesel prices and giving oil companies the freedom to change prices of the fuels in line with global market prices.
“It has been decided to set up a monitoring committee under the chairmanship of the Cabinet Secretary for reviewing the progress of implementation of the policy,” Home Minister P Chidambaram said after a meeting of the Cabinet chaired by Prime Minister Manmohan Singh.
The Integrated Energy Policy has been prepared by the Planning Commission. The report was submitted to the government in August 2006.
“India needs to sustain an economic growth of at least 9 per cent over the next 25 years if it is to eradicate poverty and meet its larger human development goals. The primary energy supply (including gathered non-commercial such as wood and dung) must increase at the rate of 5.8 per cent annually for fuelling the growth,” the Planning Commission said in a statement today.
The policy aims at optimal exploitation of domestic energy resources and exploring and acquiring energy assets abroad to attain energy security for the country. It also advocates appropriate energy pricing to promote investment in exploration and production and to control demand.
The government currently subsidises petrol, diesel, cooking gas and kerosene. It gives the oil companies, which sell these fuels at below production costs, oil bonds to partially compensate them for their losses. This put an additional burden on the government, besides putting the finances of the oil companies under pressure.
However, the policy says that subsidy on kerosene, cooking gas, electricity and clean fuels should continue, but these should be targetted to the people who can not afford to pay market-related prices.