Oil ministry in Parikh push for more cash


The petroleum ministry is likely to place the recommendations of the Kirit Parikh committee before the Union cabinet, adding fuel to the political fire over the petrol and diesel price hikes after the budget.

“The ministry will soon seek cabinet nod for implementing the Parikh report as the budget has not made enough provision for the revenue losses oil companies are suffering,” a senior petroleum ministry official said.

The official said the cabinet would take a final call on whether the report would be implemented fully or partially.

According to the panel’s suggestions, the subsidy burden of the government can be maintained at a “bearable” level if free market pricing of petrol and diesel is allowed along with periodic increases in the prices of cooking gas (LPG) and kerosene.

Trinamul Congress and the DMK have joined the Opposition in demanding the rollback of the fuel price hike. Petrol and diesel will cost about Rs 3 per litre more after the duty hike in the budget.

Finance minister Pranab Mukherjee has reportedly ruled out any rollback of duties. Mukherjee said the impact of a duty hike on inflation would be marginal in the long term and food inflation would soften in the next two or three months. However, analysts said the government would wait for the winter crop to hit the market before considering the Parikh proposals. The winter crop (rabi) is expected to bring down food inflation from the present rate of 18 per cent.

N.R. Bhanumurthy of the National Institute of Public Finance and Policy said, “Given the political economy situation, it appears unlikely that the (Parikh) report will be fully implemented in the medium term. However, the recommendations should be the long-term objectives of the government.”

Analysts said if the report was accepted, it would enable the government to cut expenditure as it would not have to make provisions for the fluctuations in global crude prices.