Govt firm on early decontrol of diesel prices

Seeking to soothe concerns over lack of an assertion in the Budget on decontrol of petroleum product prices,the minister said after the Budget session is over,the government will hold discussions with all political parties to build consensus on cutting subsidy,which necessitates price deregulation of diesel and mass use fertiliser urea. A dialogue is needed and we intend to have that dialogue. I am confident that it would be possible to have a positive outcome, he said. PM Manmohan Singh will hold discussions with state governments on this,he said.

Analysts have perceived a dichotomy between the Budget promise to limit the subsidy outgo at 1.9 per cent of GDP in 2012-13 and bring it down further to 1.75 per cent of GDP over the next three years and the absence of time-bound action plan on subsidy reforms. When asked about this,he said such things needed decisions outside the Budget. Subsidy on petroleum,fertiliser and food have jumped 26.7 per cent this fiscal to R2,08,503 crore from a year ago. Oil companies IOC,HPCL and BPCL lose Rs 12 a litre on diesel sales now and incurred a collective revenue loss of Rs 56,732 crore in the first nine months of this fiscal. Their losses from selling diesel,LPG and kerosene at state-set prices scaled Rs 97,313 crore in the same period.

Like the statement on fiscal responsibility and budget management (FRBM),in which the government fixes the fiscal deficit target for the foreseeable future,the FM intends to have an expenditure statement. Three years rolling expenditure target will be set with the view that if expenditure goes beyond the expected line,then mid-course correction has to be done. The FMs confidence in getting a consensus on subsidy reduction stems from the fact that the country was able to push through major reforms in 1991,when the government did not have clear majority

in Parliament.