The recommendations of the Arjun Sengupta Committee will form the core of the governments proposals on the issue of proposed hike in the prices of petroleum products, according to Union petroleum minister Janeswar Mishra.
The governments position is scheduled to be placed and discussed at the July 2 meeting of the United Fronts (UF) steering committee.
Refusing to disclose details of the governments proposals, Mishra indicated that a hike was imminent.
We play the role of a shopkeeper. We buy at some price and sell at another price. We need to do something in order to keep the shop running, he told Business Standard.
The Sengupta Committee has been set up to formulate a comprehensive reforms package to nurse the oil sector economy back to health. Besides Sengupta, who is a Plan panel member, the committee consists of finance secretary Montek Singh Ahluwalia, petroleum secretary V L Kelkar, revenue secretary N K Singh and economic advisor to the finance ministry Shankar Acharya.
Mishra acknowledged that there were pressures from all sides, the rich and the poor, the Left and the Right.
He said in a democracy like Indias, it is difficult to take hard decisions, but some such decisions are inevitable to keep the system going.
Mishra, however, said no decision would be taken without a consensus arrived at through consultations with the Left parties and the Congress on the issue. He added that informal talks were on; one round of talks with the Congress and the Left was over. He hoped a consensus would emerge soon.
Mishra outlined three reasons for the fall in the domestic production of oil products: there were mechanical faults in some areas, militancy in the North-East and practical difficulty in drilling in the north-eastern region.
In some areas, due to mechanical faults gas is flaring instead of oil which used to be extracted earlier. We are looking into this problem, he said.
Similarly, Arunachal Pradesh, Assam and other states in the north-east region are infested with militancy. That is the area where oil exploration can produce results, Mishra said.
He, however, hoped that the country would inch towards a self-sufficient stage in terms of production of petroleum products in six years time.
The petroleum minister said he was looking into the matter of revising the prices of natural gas, which had not been touched since 1991. This has been one of the demands of the Left parties.
The minister said he had not applied his mind to the long-standing demands of some of the oil producing states to give them some royalty on the basis of the quantity of production. He, however, stated that, since state governments already got funds from the Centre, both in the general budget and the planned budget, there was no need to give royalty to states in lieu of production of oil.
Such steps may lead to regional imbalances. Mineral rich states will get a lot of Central assistance whereas others will be deprived, he observed.
We play the role of a shopkeeper. We buy at some price and sell at another price. We need to do something to keep the shop running
Janeswar Mishra, petroleum minister
