Yesterday, the Kirit Parikh panel report recommended complete deregulation of petrol and diesel prices. In effect, that would mean a Rs 4.72 paise hike in petrol, Rs 2.33 paise hike in diesel, and Rs 6 hike in kerosene and Rs 100 hike in liquefied petroleum gas (LPG).The question is: will the government bite the bullet and hike prices?
In an interview with CNBC-TV18, Former Petroleum Minister Ram Naik and Manish Tiwari, Spokesperson, Congress gave their perspective on the issue.
Here is a verbatim transcript of the interview. Also watch the accompanying video.
Q: Given the inflationary pressures that the government faces right now, do you think this price hike is possible?
Naik: I would first say that this government has lost six precious years in finalising the policy for the petroleum products. Right in 2002, we decided to deregulate and moved a step forward by which petrol and diesel prices were linked to the international markets.
After Dr Manmohan Singh’s government came in, they said that they will revise the policy, form a policy and they have not done it in the last six years. Given the present circumstances, they have to take a bold decision.
But at the same time, a bold decision doesn’t mean passing on the entire price increase on the consumers. What they can do is they can reduce the import and excise duty so the increase in the revenue gets adjusted without passing on the burden to the customers.
This will also help the oil companies and most of the government oil public sector undertakings (PSUs) or recognized companies, navratna companies. They are suffering because of the government’s lack of proper planning.
Q: This is a panel that has made recommendations to the government. We understand that the Prime Minister’s office (PMO) has said that swift action must be taken but does it find political support at this point in time because it is requiring very bold reforms, bold measures?
Tiwari: First of all, I would like to correct Mr Naik, it wasn’t the dismantling of the administered price mechanism which was brought down by the National Democratic Alliance (NDA) government in terms of the fact that it was not clearly market linked. There was a huge subsidy element to it at that point in time also.
Having said that, for the government it has to look at both sides of the story. You have a huge import bill, you have OMCs which are incurring heavy costs which are being defrayed by the government through various monetary mechanisms.
On the other hand, you have a situation whereby because of the unprecedented drought, you have an inflationary spike in the economy. So I guess the government would weigh the pros and cons and take whatever decision is considered appropriate.
Q: Are you then making a case at this point in time – you have pointed out reasons that seem to suggest that the Congress is not supportive of moving towards deregulation at this point in time. Are you suggesting that this report will not find political support, the Rangarajan committee report did not find political support, neither did the BK Chaturvedi committee report, which pretty much were along the same lines as the Parikh report?
Tiwari: I think there is no need to see things black and white or in a shade of grey. There is the case for making the OMCs financially viable of restoring their fiscal health.
On the other hand you need to keep the larger public interest in mind also. After all there are millions and millions of people who are both below and above the poverty line who require the subsidy support. So, therefore the government will have to find some kind of a mechanism which takes care of the OMCs and their priorities.
Q: That is what this report set out to do, that is what this committee set out to do, to actually find a mechanism to improve the oil economy to actually move away from - of subsidizing the rich. That is what this report hopes to do, there is no shades of grey. So I am going to ask you very specific question, will the Congress support a price hike at this point in time even if it were not the Rs 100 as far as the report is suggested for LPG but will the Congress support any sort of a price hike at this point in time?
Tiwari: First of all it is to the government to apply its mind to the report, it is for the government to distill the recommendation and come to certain concrete conclusions and after they come to those conclusions then only would be the question of the Congress making up its mind coming.
Q: It is clearly a balancing act between the interest of the consumer and interest of the oil companies as well. We have seen committee after committee coming out and making these proposals, what do you think is – is it just political will or given the fact that you've talked about a middle path, cannot that middle path be easily achieved. Do you think if the UPA government goes ahead and hikes those prices, the opposition is going to let this political hot potato off?
Naik: They will appoint a fourth committee to study the reports of the first three committees and they will try to buy time. The government must take the bold decisions and ensure that the excise and import duties are cut so that the expected revenue is received.
Now the finance ministry is always unwilling to pass on whatever excess is earned by them beyond the expected budget proposals. So that should be done and with that I think the health of the oil companies can be improved. That is the way the government must take a decision.
It is very easy to say to increase the prices of LPG or kerosene. But it is difficult to pass on the revenue extra earned to the oil companies. That should be the first step the government should take.
Q: We seem to be seeing the oil economy caught in the crossfire of politics. You moved towards or partially moved towards a deregulated sort of situation in 2002 when you were the oil minister. But at this point in time, would you support if the Congress were to go ahead with the price hike?
Naik: No, the government must take opposition also into confidence because the state of the economy is in the intensive care unit (ICU) if I have to speak in medical terms and to come out of this ICU state of affairs, the government must take opposition into confidence.
Q: Will you as a former oil minister, as a member of the Bharatiya Janata Party (BJP) support an oil price hike given the recommendations made by the Kirit Parikh report? You yourself have seen recommendations made by two previous committees.
Naik: As it is, I would not accept them but I will find out a way by which the oil companies and also the consumers won’t suffer. That is not very difficult. The government must come to the problem and take the decisions.
Q: We understand from the oil minister that this matter will be taken up by the cabinet in next week or ten days. By when do you see the Congress party deliberating on this?
Tiwari: First of all, it is for the government to deliberate on it, first of all the government has to make up its mind as to which recommendations or what quantum of which recommendation is the government going to accept.
Once the government has made up its mind, whatever is in the widest possible national interest, the Congress is always supportive of national interest.
0 Comments:
Post a Comment