At current international crude oil prices, deregulation of auto fuels will result in a Rs 4.72-per-litre increase in the price of petrol and a Rs 2.33-per-litre increase for diesel.
But given the current political realities, the government is unlikely to accept the recommendations of the committee in their entirety. The government is already under attack from the Opposition over high food prices. Any hike in fuel prices at this time will have a backlash. A diesel price hike would result in a further increase in food prices and other products as the cost of transportation will rise.
“We will present a view before the Cabinet in a week. It will be the Cabinet which will take a final decision,” said the petroleum minister, Mr Murli Deora.
The petroleum secretary, Mr S. Sundareshan, said the ministry has been directed by the PM to immediately process the report. But when asked whether the government would implement the recommendations immediately, the secretary was quick to add that there is a “definite difference between processing and implementation”.
Two earlier committees had recommended deregulation of fuel but nothing happened due to political opposition. A committee headed by the present chairman of the PM’s Economic Advisory Council, Dr C. Rangarajan, had in 2006 advised linking prices of petroleum products to cost of crude oil. In 2008, a committee headed by the Planning Commission member, Mr B.K. Chaturvedi had made a similar recommendation.
Asked about this, Mr Deora said: “I hope history doesn’t repeat itself.”
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