There was no case for referring gas price hike to EC: FM

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Finance Minister P Chidambaram today said there was no case for referring Cabinet decision to double gas price to the Election Commission (EC) and it was done out of "abundant caution".

"In my view there was no obligation on the part of Ministry of Petroleum and Natural Gas to refer this issue to the EC in the first place," he said when asked if it was right to seek EC's nod over the Cabinet decision on gas price hike.

"This was a Cabinet decision taken several months ago. The cabinet to reviewed the decision about two and half three months long before EC notification came and reiterated its earlier decision. Therefore, there was no case to refer to the EC. I think they (Petroleum Ministry) did it out of abundant caution," he said.

Last week, the EC asked the UPA government to defer notifying doubling of price of the fuel produced by companies such as Reliance Industries till general elections are completed.

A new pricing regime was to be implemented from next month for all private and public sector natural gas producers under which rates were to rise to $ 8.3 next month from current $ 4.2 per million British thermal units.

On the issue of grant of new bank licence by RBI, Chidambaram said there was no need to to refer it but it was done by out of abundant caution.

"Governor Raghuram Rajan made it clear even on that they referred to EC only out of abundant caution. This process had started almost two and half year ago. This is the process where the government has no role at all," he said.

The process of inviting, screening, scrutinising and selecting candidate for grant of bank licence is a period RBI driven process and the government has no role at all, he said.

As many as 25 players have submitted application on July 1, 2013 for getting bank licence from RBI.

"Therefore, I think there was need to refer it. He explained it by saying that he had done by abundant caution. He has just assumed office a few months ago. He was playing safe. But I think process of granting bank licences should continue uninterruptedly," he said.

Defending the decision, the Finance Minister said: "I think there is no case to revisit the Cabinet decision. It has taken in to account all pros and cons, including reservations expressed by different ministries."

"Please remember, for every unit of gas that we don't produce out of our own fields, it does not mean that we can live without gas, we have to import an equivalent unit of gas. Today we are importing one unit of gas at a much higher price than approximately $ 8 that we had indicated with effect from April, 1 2014," he said.

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