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Despite political reverses for the UPA, petroleum minister M Veerappa Moily today ruled out raising the cap on number of subsidised LPG cylinders, though he was noncommittal on higher increase in diesel price, for a complete shift to market price before the end of government's tenure in May.
The Ministry of Petroleum and Natural Gas would, however, be moving a proposal for exempting state transport corporations from buying diesel at market rates, Moily said at a media briefing here. Under the current policy, consumers are eligible for subsidised cooking gas for nine refills.
Subsequently, they have to buy cooking gas at market rate which is currently Rs 555 higher than subsidised rate. In the case of diesel, oil marketing companies increase price by 50 paise every month for retail buyers for a phased decontrol of price, but market price is charged for sale through bulk outlets.
An expert panel under Kirit Parikh had called for Rs 5 a litre hike in diesel and Rs 250 increase in LPG rates. He did not directly answer the question on whether an increase in petroleum prices had impacted UPA’s performance in recently concluded elections to five states but added, "Election results will not drive UPA government or the Congress to panic. The Congress or UPA will not act in panic. These decisions have been taken in national interest and we will continue to act in best interest of the country and its people," he said.
The minister said the suggestions given by the committee are "very good" as they will help restore fiscal balance. “Economically that is the right decision but how practical is it, how we can apply (it) that is something we have to take a view on it."
Diesel is currently sold at retail outlets at a revenue loss of Rs 9.9 a litre. It could take over one-and-half years to wipe out the entire loss if the price is increased every month by 50 paise.
"If the country has to go forward, reform is a must. But the question is whether we can implement what has been recommended because we have to balance between the consumer (interest) and government revenue. A balance view will be taken on the report.”
In the current financial year, revenue loss on diesel has varied from as low as Rs 3.5 in May to as high as Rs 14.5 in mid-September.
The total under-recoveries, or revenue loss, on diesel and cooking fuel (LPG and kerosene) could be around Rs 147,500 crore, which could lead to the government exceeding the budgeted Rs 65,000 crore for total fuel subsidy burden for 2013-14 fiscal.
Director Benefit Transfer: The government plans to move ahead with the scheme in 107 additional districts from January 1 next year, despite a September 23 Supreme Court order saying the Aadhar number could not be made mandatory and that no one should “suffer” because he did not have it.
The petroleum minister said the scheme has been a great success with Rs 1,615 crore transferred into the bank account of 1.27 crore LPG consumers. In all 291 districts are expected to be covered under the scheme that makes Aadhar number mandatory for LPG subsidy.
RIL bank guarantee proposal: Moily said they have received comments from the ministries of finance and law, and the Planning Commission.
"It is yet to be put up to me. But we are working on it," he said.
Reliance Industries Ltd might have to shell out $9 billion in bank guarantee if the government approves a proposal to monetise the differential between the targeted and actual production as bank guarantee from the company. The ministry of finance feels such a proposal could dilute the government stand in arbitration with the biggest private sector company in the oil sector.
