 "Jaitley defends decision to raise gas price")
He said the $5.61 per million British thermal units (mBtu) price decided on would ensure profits for explorers but not windfall gains. The Rangarajan formula would have increased the price to $8.4 per mBtu against the current $4.2 per mBtu.
“It is a rational decision... Even at this (new) price, explorers are going to make profit. They won’t have a windfall profit. At the same time, the burden on consumers will be minimal,” he said.
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Jaitley said the approved price, as against the $8.4 per mBtu approved by the previous government and higher rates demanded by private companies Reliance Industries and BP, balances the incentive for investment with consumer interest. “Prices have to be realistic, prices don’t have to favour just one group. They have to be market-centric; they can’t be merely centric to windfall profits,” Jaitley told a news channel.
Adding: “It is a balancing act. I am not against business, or against big business. I don’t consider profit a bad word. I think it is windfall profit that is a bad word. Therefore, this (gas price hike) ensures profit rather than windfall profit; at the same time, this also factors into interest the aam aadmi.”
Faced with a five-fold rise in gold imports in September that might push up the current account deficit, Jaitley said the government would look at a possible re-imposing curbs on these after Diwali.
“Let the festival season be over, I will have a look at it,” he said. “I don’t want to spoil the festival season. It is only a few days away.”
With both retail and wholesale prices inflation numbers down in September, he said he’d like interest rates for credit to go down. “When the rates start going down, the offtake of credit will increase, there will be a lot of economic activities.”
Consumer Price Index-based inflation fell to a low of 6.46 per cent in September and the Wholesale Price Index-based rate of price rise declined to a five-year low of 2.38 per cent.
The minister, however, added it would be a professional decision by the Reserve Bank of India, which was sensitive to the whole matter.
On deregulation of diesel prices, he gave credit to the earlier government, too. “They took a very wise decision, to increase the price by 50p a month, so that it comes at par with the market (rate).”
The present government, he said, was able to add a sweetener to this decision by reducing the prices by Rs 3.36 a litre as global prices came down. “This also brings down subsidies in the Budget.”
On reforms in general, Jaitley said, “The Prime Minister and I (are) determined to move in that direction and I think the last five months is evidence that we have moved in one direction.”