New Delhi: The government’s decision to increase subsidized gas prices has brought to the fore differences within the cabinet about the manner in which decisions are being rushed through without discussion, especially of politically sensitive issues.
The Centre’s decision to increase the price of subsidized gas sold by state-owned firms has led to rumblings within the Congress-led United Progressive Alliance (UPA) government.
At least two ministers who attended Wednesday’s cabinet meeting said that petroleum minister Murli Deora’s proposal to increase the administered price of gas was not discussed in detail.
“The minister just read out three lines and the decision was taken in a few minutes,” a minister said on condition of anonymity. “Even (power minister) Sushil Kumar Shinde’s remark that it would lead to an increase in the rates of power was not taken seriously.”
The minister said that a detailed cabinet note distributed ahead of the meeting was opaque and full of jargon.
“Such decisions, which have an impact on people, should have been discussed in detail,” he said. “It’s not necessary that every minister in the cabinet is aware of all the implications.”
Deora denied any intention of ramming decisions through the cabinet.
“This is not a fair allegation and it’s not correct,” he said. “Everyone knows this is the correct thing. Why should state-owned companies suffer a loss when RIL (Reliance Industries Ltd) is selling gas at $4.20 (Rs196.56) per million British thermal units (mmBtu). How is this arrangement wrong?”
Wednesday’s cabinet decision doubling the price of gas under the administered pricing mechanism to $4.20 per mmBtu, the price at which RIL sells the gas from the D6 block of the Krishna-Godavari basin, is expected to push up fuel costs for the sensitive power, transportation and fertilizer sectors, mounting pressure on companies to pass on the increase to consumers.
Shinde said there would be an increase in the power tariff by Re1 per unit by those projects which use gas to generate electricity.
“The increase in administered gas price will certainly increase the electricity rates because the cascading effect is bound to come on such things,” Shinde said on the sidelines of a Federation of Indian Chambers of Commerce and Industry event in the Capital.
But the minister declined to comment on the way the decision was taken. “This is a cabinet decision and it is binding on us, and I cannot comment on it,” Shinde said.
During the UPA’s first tenure (2004-09) also, some ministers had complained that cabinet decisions related to reforms were taken without detailed discussion.
“There is a tendency in the government to finalize crucial decisions in the CCEA (cabinet committee on economic affairs), which is not represented by the entire cabinet. This is wrong, as major policies have to be finalized after thorough discussion and after taking everyone’s views into consideration,” said a Congress leader, who was a cabinet minister during the UPA’s first term.
Significant changes to foreign direct investment rules were made in February 2009, three months before the general election. Some ministers complained at the time that the decision had been taken in a hurry. In contrast, the cabinet decided to change the fertilizer subsidy regime to a nutrient-based one in February after long deliberations within the cabinet. However, this was after key ally Dravida Munnetra Kazhagam objected to the move.
A senior Congress leader said major policy changes are discussed by the top leadership. “All major decisions are discussed at the party core committee meetings and decisions, which have political impact, are conveyed to (Congress chief) Sonia Gandhi,” said a general secretary.