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New Delhi: The government is likely to alter the way diesel and cooking fuels are priced to reduce its subsidy burden, which appears to be spiralling out of hand due to the falling rupee.
Since the last fiscal, the Finance Ministry has pushed for refiners to be paid the equivalent of rates they would have realised if diesel, kerosene and LPG were exported.
A departure from the import parity price (import price plus duties and transportation) mechanism would have shaved Rs 17,618 crore from last fiscal’s Rs 161,029 crore subsidy bill.
But oil minister M. Veerappa Moily thwarted the move by seeking the Prime Minister's intervention and promising to get the pricing issue looked at by an expert committee.
A panel under former Planning Commission member Kirit S. Parikh was constituted to suggest a suitable pricing mechanism. But finance minister P. Chidambaram has got the panel’s terms of reference altered by mandating it to suggest a model based only on export parity pricing.
“Finance minister wanted a change in the reference (which) we have adopted,” Moily said. Originally, the oil ministry had proposed that the committee be asked 'to revisit the current pricing methodology of import parity/trade parity'.
Links:
[1] http://103.241.136.51/dieselap00jpg-414