New Delhi: A decision on whether to increase the price of petrol and diesel, expected to lead to political whiplash, has been deferred by the government.
The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, met on Monday evening to consider whether to deregulate the price of petrol, one of the main recommendations of the Kirit Parikh Committee, appointed by the government to draft a policy for fuel pricing. The meeting ended with, well, a decision to have another meeting soon on the issue, most likely on Thursday.
"Today, it was not possible that all of them (EGoM members) could attend. Thursday will be a Cabinet day. Normally, all the ministers remain present. I will talk to them and after talking to them, I will call the meeting. It will be done shortly," Mukherjee said.
The EGoM deferred the decision on raising fuel prices due to a lack of quorum, even though it appeared there was consensus on freeing petrol prices from government control.
The panel could not arrive at the decision in the absence of four key ministers, including Railway Minister Mamata Banerjee and Agriculture Minister Sharad Pawar, a source privy to the deliberations at the EGOM said.
Banerjee, who is away in Kolkata, had communicated that her party, the Trinamool Congress, was against "any steep hike" in diesel prices and wanted domestic LPG and kerosene consumers to be spared, the source said.
NCP chief and Union Agriculture Minister Sharad Pawar could not attend the meeting because of illness, while the absence of Transport Minister Kamal Nath and Power Minister Sushil Kumar Shinde was attributed to their being abroad on official business. "The ministers were not present (so a decision could not be reached)... We will meet again soon," Oil Minister Murli Deora said.
In February this year, the committee, headed by economist Kirit Parikh, presented its report to Petroleum Minister Murli Deora. It also suggested raising petrol prices by Rs 6 a litre, and LPG rates by Rs 100 a cylinder.
Petroleum Ministry made a presentation on the impact of the Parikh committee's recommendation, projecting a revenue loss of Rs 72,300 crore if petrol, diesel, domestic LPG and kerosene continue to be sold at rates below the imported cost.
In the morning, experts suggested that if petrol and diesel prices were decontrolled, prices would climb by about Rs 3 a litre, which is the difference between what the import price that the government pays for petrol, and its retail price. (
Read & watch: Petrol, diesel, LPG price hike likely on Monday)
The government-owned Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently lose Rs 203 crore per day on selling fuel at subsidized rates. They don't have the freedom to adjust their retail prices according to international rates.
Ahead of the ministerial meeting on Monday, Ahluwalia said, when asked about whether this is the right time to raise prices, "For six months, I have been saying we should...I haven't changed my mind." (
Read: Plan panel favours hike in petrol, diesel prices)
Earlier, Ahluwalia had told PTI in an interview, "India's international economic reputation requires us to say that fuel prices are going to be linked to global prices. I think that linkage (of fuel prices with global prices) is unavoidable."
However, he favoured providing subsidised kerosene to the poor - stressing on the need for exploring the possibility of giving direct subsidy.
State-owned Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum currently lose Rs 203 crore per day on selling fuel below the imported cost.
Any decision on fuel prices is likely to impinge upon the carefully-calibrated political equation of the UPA coalition at the Centre. Allies like Mamata Banerjee and the DMK's M Karunanidhi opposed fiercely the government's decision, in the union budget presented in February, to increase duties that pushed up the prices of Petrol and diesel by Rs 2.71 a litre and Rs 2.55 per litre, respectively while cooking gas cylinders became expensive by Rs 30.
The Opposition eventually moved a cut motion on the price rise in April, but the government sailed through that move. (With PTI inputs)