A set of eight options to tackle the oil pool deficit will be placed before Prime Minister I K Gujral after he returns to the capital from a tour of the North-East today.
The Prime Minister has convened a meeting in his office to finalise the option which will be presented before the United Front steering committee on Sunday.
The eight options have been selected from among a number of permutations and combinations worked out by the petroleum ministry to reduce the Rs 16,000 crore oil pool deficit, which is increasing by Rs 800 crore every month.
Most of these options are learnt to be variations of different increases in prices of some petroleum products and reduction in duties on others. The options are designed to tackle only the flow factor while leaving the stock factor to be taken care of at a later date.
The flow factor refers to the monthly accretion to the oil pool deficit, while the stock factor implies a figure at a given point of time, say, the total oil pool deficit as of May 31, 1997. Therefore, moves to tackle the flow figure imply that the governments top priority is to prevent the oil pool deficit from rising further.
The petroleum ministry favours adoption of a rainbow route incorporating an inc-rease in prices of some petroleum products and reduction in duties on others, as well as structural adjustments to the administrative price mechanism (APM) rather than an across-the-board increase in prices of petroleum products.
The Prime Minister will also consider the finance ministrys strategy paper, which calls for a 15 per cent increase in prices of diesel and liquefied petroleum gas (LPG) and a 20 per cent increase in kerosene prices to reduce the oil pool deficit by Rs 5,500 crore. However, the finance ministry paper does not mention any roll-back in duties on petroleum products.
Both the finance and petroleum ministries are aggressively canvassing support in the Prime Ministers Office for their conflicting stands on the issue. Todays meeting is also expected to take note of the views expressed by United Front constituents before reaching a decision on the contentious issue.
