FinMin expects decontrol of diesel,fertiliser prices by June

Meanwhile,the fertiliser subsidy is pegged at Rs 60,974 crore in 2012-13 as against Rs 67,199 crore in the revised estimates for the current fiscal.

A decision on deregulating fertiliser and diesel prices could be taken as early as the first quarter of 2012-13 with the finance ministry keen to ensure that expenditure on oil subsidy stays within Budget.

We would expect a decision on deregulating diesel prices by June this year as there is an urgent need to keep oil subsidy in check. An increase in the subsidy burden would have a direct impact on the fiscal deficit,which we can not afford at this juncture With global crude oil prices remaining high,any delay on this issue could increase the outgo on fuel subsidy, a finance ministry official said.

As part of his road map for fiscal consolidation,finance minister Pranab Mukherjee has proposed to restrict the Central subsidies to below 2 per cent of the GDP and gradually lower it to a level of 1.75 per cent of the GDP over the next three years.

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Mukherjee,in his Budget speech,had indicated that while the government would foot the entire bill for food subsidy,subsidies on diesel and fertiliser would have to be reviewed.

Consequently,for 2012-13,the fuel subsidy has been estimated at Rs 43,580 crore,which is 36 per cent lower than the Rs 68,481 crore provided as fuel subsidy in the revised estimates for 2011-12.

Meanwhile,the fertiliser subsidy is pegged at Rs 60,974 crore in 2012-13 as against Rs 67,199 crore in the revised estimates for the current fiscal.

Despite opposition from key UPA allies Trinamool Congress and DMK the finance ministry is hopeful that the government will take a decision on deregulating diesel price.

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