The Budget has delivered a body blow to the Kirit Parikh recommendations on reforms in the petroleum sector. While it was always difficult to conceive of a situation in which the government would raise prices by what the report asked for, it was expected that the Budget would make a beginning in this direction. That hope has been belied since the Budget’s hike in duties forced a price hike anyway — it is unlikely the government will hike prices twice over in such a short period of time. In other words, the window of opportunity that the Budget offered has been lost.
This will have a larger implication on investments in the sector as firms like Reliance Industries will have to once again put on hold their plans to reopen the petroleum outlets that they had shut some years ago. It is unfortunate that the government should, apart from hurting its own PSUs, also hurt the prospects of private firms that, in good faith, invested in the sector many years ago. This is something the Competition Commission needs to look into. Its job is not just to ensure private firms don’t gang up to hurt the consumer, it is also to ensure that the government provides a level playing field to everyone.
Satish Gupta, New Delhi
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