The government has begun its Budget-making exercise for the next financial year and has asked various ministries and departments to firm up their estimates of revenue and expenditure. The petroleum ministry has called a meeting of senior officials later this week to take stock of the contentious issue relating to losses on sale of fuel.
|Fuel Prices were frozen in February, but crude oil prices have since jumped to near $100 a barrel|
Oil Bonds of Rs 23,457 crore 42.70 per cent of the losses oil companies are incurring on sale of fuel below import parity prices are to be issued by the finance ministry
The petroleum ministry reckons the subsidy on rationed kerosene and cooking gas for 2008-09 will be Rs 2,700 crore, a marginal increase from Rs 2,657 crore in 2007-08. This subsidy is provided for directly in the general Budget.
Even as the exercise gets under way, Prime Minister Manmohan Singh told newsmen that a group of ministers had been constituted to look into the revision of fuel prices, necessitated by a spurt in global crude oil prices. He, however, did not say when the Cabinet discussed the issue and who would head the ministerial group. “Cabinet did discuss this matter. I have appointed a GoM to report back to Cabinet within a month,” he told reporters on way to Singapore to attend the ASEAN summit.
Singh has also called for a solution of the problem of mounting subsidies in food, fertilisers and petroleum. In a meeting of the full Planning Commission, he asked his Cabinet colleagues to ponder on the implications of a subsidy bill of Rs 1 lakh crore being spent this year alone.
A major issue troubling the petroleum ministry has been the “mismatch” between retail prices of petrol and diesel and international crude oil prices. The ministry had estimated the projected losses to oil companies on this account in 2007-08 at Rs. 54,935 crore.