New Delhi: With inflation at a 13-year high, the government on 19 August appeared unwilling to implement most of the recommendations of B.K. Chaturvedi Committee and said a view on its suggestions will be taken in due course. Thecommittee was set up by the Prime Minister to study the financial health of oil companies. The oil ministry, in a preliminary report to the Prime Minister’s Office, has said that raising petrol prices by Rs2.50 a litre per month till March 2009 and diesel by 75 paise per litre till 2010 was not possible. The ministry has rejected the committee’s call for pricing fuel at export parity rates, saying it would result in refineries losing around Rs27,600 crore in revenues. Also, suggestions for reducing import duty on petrol and diesel to zero were not accepted, as it would result in withdrawal of duty protection to the domestic refineries as compared to international refiners.
The Chaturvedi panel suggests that households should get six subsidized cylinders a year. This should then be reduced to four, two and zero in the subsequent three years. Accepting any of the suggestions is going to be difficult for the government, especially in an election year. At the same time the government can not for long ignore the mounting losses faced by public sector oil marketing companies.