New Delhi: With food inflation ruling at uncomfortable level, Petroleum Minister S Jaipal Reddy on Thursday ruled out freeing of diesel prices from government control, saying the move was not politically and practically feasible.
"It is not possible (just now)," he told reporters here.
Decontrol of diesel, as was decided by an Empowered Group of Ministers (EGoM) in June last year, would mean up to Rs 7 a litre hike in the price of fuel that is used in transport sector and has direct bearing on food and general inflation.
With food inflation ruling at 15.57 per cent, any increase in diesel prices just now would fuel further hike in general prices.
"Let me make it clear, I am in agreement in theory with (Planning Commission Deputy Chairman) Montek Singh Ahluwalia that diesel and other fuel prices should be deregulated but I will request him to examine (such a move) practically and politically," he said ruling out decontrol of prices just now.
Ahluwalia has advocated freeing of diesel prices, on the lines of deregulation of petrol prices, to bring down government subsidies.
Asked if government may consider raising kerosene prices to check its adulteration in diesel, Reddy replied in negative.
"(It is) politically sensitive to remove subsidies, so not feasible," he said.
A litre of kerosene costs Rs 12.32 a litre while diesel is priced at Rs 37.75 a litre. The huge difference makes it lucrative for diverting kerosene from Public Distribution System (PDS) to mixing in diesel.
"Political feasibility means deeper sense means providing commodities to the poorer sections of society. We still have the poorer section of the society depending on kerosene," he said.
Reddy, who last week replaced industry-friendly Murli Deora at the Oil Ministry, has ruled out raising fuel prices as of now.
The government had in June last year decided to make petrol prices market-determined and had stated that diesel rates will be freed from control in due course.
State-owned oil firms Indian Oil, Hindustan Petroleum and Bharat Petroleum are losing about Rs 7 on sales of every litre of diesel and have been pressing for a price hike.
Asked about petrol, whose rates have been raised seven times since June, 2010, including Rs 2.50-2.54 a litre hike of this month, Reddy said there will be no rollback in prices, though he did indicate there will be no immediate hike either.
Oil companies are losing about Rs 1.20 a litre on petrol as crude oil prices have topped USD 92 a barrel. In addition, they lose Rs 7 a litre on diesel, Rs 366.28 on LPG and Rs 19.60 a litre on kerosene.
Comments
0 comment