June 04 2020
Rangarajan hints at hike in prices of petroleum products
09 June 2011

Hinting at a possible hike in the prices of petroleum products in the coming days, Prime Minister's Economic Advisory Council (PMEAC) chairman, C. Rangarajan on Thursday said increasing prices of petroleum products “was necessary’’ to restrict the fiscal deficit to 4.6 per cent in the current fiscal.

“Review of administered prices, particularly with respect to petroleum products, has become necessary. It is required primarily from the point of view of maintaining the fiscal deficit,’’ he told reporters in New Delhi.

Stressing on the need to bring domestic prices of petroleum products on par with the prevailing international market rates, Mr. Rangarajan said: “It is necessary because India imports nearly 80 per cent of its requirement with respect to crude oil.’’

International crude oil prices have been soaring due to unrest in Middle East and North Africa (MENA) region but of late have showed signs of moderating. State-owned oil marketing companies (OMCs) had

last month raised petrol price by about Rs. 5 per litre to reduce their losses. The OMCs have been pushing the government for a hike in the prices of diesel, domestic LPG and PDS-distributed kerosene oil pleading that they were suffering massive losses on account of under recoveries.

Although the government has deregulated petrol, giving freedom to OMCs to fix prices, it has refrained from taking any decision regarding diesel prices in view of high inflation and its impact on the overall economy.

State-owned companies – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) -- are losing about Rs. 14.66 per litre on diesel, Rs. 29.69 a litre on kerosene and Rs. 329.73 per 14.2-kg domestic LPG cylinder. In 2010-11, the three firms lost Rs. 78,202 crore on account of subsidies, but the government has provided only Rs. 40,912 crore in compensation.



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