Govt revisits oil price deregulation

The Kirit Parikh panel submitted its much-awaited report on fuel pricing to the Petroleum Ministry. The experts group, headed by the former Planning Commission member Kirit Parikh, recommended freeing of petrol and diesel prices, while raising kerosene and domestic LPG rates by Rs. 6 per litre and Rs. 100 per cylinder respectively. The committee recommended that prices of kerosene and domestic LPG should be raised in line with the per capita income. At current levels of global prices, the proposal if implemented would result in hike of the petrol and diesel prices by around Rs3.9/litre and Rs3.2/litre, respectively. The move will lead to nil under-recoveries on auto fuels as the entire burden would shift to the consumers. However, chances of deregulation of diesel prices are fairly slim on account of its impact on inflation. Currently, under-recoveries on these products are Rs287/cylinder and Rs16.5/litre. The recommendation, if implemented, would result in reduction in the subsidy burden by around Rs70.2bn on kerosene and Rs78.8bn on the domestic LPG, resulting in reduction in under-recoveries by around Rs149bn. Petroleum Ministry has given an assurance that the matter will be processed in a week's time. The Cabinet will then take up the report. It will be put up before the Cabinet in a week's time and it will be considered by the Government at the highest level in about 15 days.