Govt's 'oil subsidy business' bound to get bankrupt: PlanCom

The government's "oil subsidy business" is bound to get "bankrupt" sooner or later, Planning Commission member B K Chaturvedi said today.

Speaking at an international conference on public policy and governance here, the former Cabinet Secretary said the Planning Commission has been advocating the need to cut oil subsidies, which are in the range of Rs 1.4 lakh crore- Rs 1.5 lakh crore annually, but admitted that it's a "difficult explanation in political spectrum".

"On the other hand, it's being argued (by the government) that, look, if diesel prices go (up), therefore...then inflation (will go up) we can't really afford it", the member of the 13th Finance Commission said.

"Now the fact of the matter is this is a policy choice (vis-à-vis whether or not to cut oil subsidies)".

Chaturvedi said "oil subsidy business" policy is in existence for a long time and "it's very, very difficult to displace it (now)".

The Planning Commission has been telling the government that this "business will never run", he said.

"When you are buying at USD 140 a barrel and selling at USD 130," Chaturvedi said, giving a figure for example.

"This business sooner or later is bound to get bankrupt. Question is how later," he said but acknowledged that these are "difficult choices".

The Commission has been explaining to the government that "if you don't have subsidies, you can have more schools, more hospitals, better facilities, more roads, more villages getting energy...", he added.

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