New Delhi: Weakening of rupee against the US dollar has added a mind-boggling Rs 50,000 crore to the fuel subsidy as the nation paid more for its oil imports, oil secretary G C Chaturvedi said on Monday.
“Every time the rupee depreciates by Re one against the US dollar, Rs 8,000 crore is added to the fuel subsidy bill... the rupee has depreciated from Rs 46 to a US dollar to roughly Rs 52 per US dollar, thereby adding Rs 50,000 crore (to the subsidy),” he said at the 10th Petro India conference here.
State fuel retailers are projected to lose a record Rs 137,605 crore this fiscal on selling diesel, domestic LPG and kerosene at government controlled rates which way below the cost.
“The government has to look at means of meeting this deficit,” he said.
Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum currently lose a record Rs 13.53 on selling every litre of diesel, Rs 29.99 per litre on kerosene and Rs 287 per 14.2-kg domestic LPG cylinder.
Chaturvedi said the government had in June last year freed pricing of petrol but the same on diesel is not on cards as of now.
He also ruled out dual pricing of diesel under which users like mobile telephone towers and electricity generators would had to shell out rates higher than the current subsidised rate for the fuel, saying the proposal is not practical to implement.
“We will not be able to administer it and will lead to lot of hurdles,” he said.
Diesel is the most consumed fuel in the country but is sold at a discount to the cost of production. The subsidised diesel is the preferred fuel for the transport sector (both trucks and passenger buses) and is also used in irrigation pumps and other agriculture equipment.
Luxury cars and SUVs too run on diesel and so do power generators at malls and telecom towers.
Speaking at the conference, minister of state for petroleum and natural gas R P N Singh said deregulating diesel and LPG were not politically feasible.
“We have to move cautiously to ensure that our decisions are equitable and lead to balanced growth. We as policy makers and politicians have to mediate between the social, economic and environmental attributes of energy,” he said.
The minister said the government fully realises that prices give the clearest signal about the relative positioning of energy sources in order to attract both investments and technology in any sector.