In all likelihood finance minister will announce a decontrol of petrol prices in the

RELATED ARTICLES BPCL-Videocon discovery may hold 15-30 tcf of gas Oil firms' losses on diesel sale at record high of Rs 14.57/litre

budget. Taking effect from April 1, the decontrol will mean an increase in the prices of the fuel.

According to a petroleum ministry official, the UPA, in discussions with political parties, sees freeing petrol prices as the path of least political resistance. But diesel, kerosene and cooking gas are another matter altogether. The UPA leadership is still working towards forging a consensus on diesel price decontrol and raising prices of cooking gas by Rs 100 a cylinder and kerosene by Rs 6 a litre, as had been suggested the Kirit Parikh committee.

Petrol is used only as car and two-wheeler fuel. The political consensus opinion is that car and even two-wheeler users can afford costlier petrol, which will result from the decontrol. The increase could be Rs 4 a litre at the pump, given the current global crude prices of around $75 a barrel.

“The finance minister is likely to announce petrol price decontrol in the budget. On the other three fuels we are yet to receive a political clearance,” said the official, requesting not to be named.

After a review of the Parikh committee report, the petroleum ministry has recommended decontrol of both diesel and petrol, and a minimal hike in cooking gas and kerosene prices.

A decontrol of petrol alone will mean a drop of Rs 5,000 crore annually in under-recoveries. In the budget last year Mukherjee

Made it known that the government would set up a committee to look into the pricing of petroleum products in view of the massive spike in global prices oil and products at the time, which had forced most oil importing countries, “including our neighbours”, to raise retail prices. With almost three-quarters of India’s oil consumption met through imports, domestic prices of petrol and diesel must be broadly in sync with global prices, he had said.

The constitution of the Kirit Parikh committee then followed. Its report, submitted on February 3, said, “A two-wheeler consumes, on an average, 86 litres of petrol a year, for which the owner spends Rs 320 a month. The fuel expenditure of car owners is much larger at Rs 2,210 a month. Motorised vehicle owners are largely well off, belonging to the upper two and three deciles of the population. There is no reason to subsidise this class of consumers...”

siddharthasaikia@mydigitalfc.com