Attacking the government for not being “transparent” in fixing
petroleum prices, a leading NGO CUTS — said today the oil subsidy
burden was “exaggerated” and there were ‘distortions’ in calculating
LPG and kerosene subsidies.
“The claim of huge subsidy burden on petroleum products and bleeding
oil companies is exaggerated, and most of the burden is passed on to
the consumers,” CUTS Secretary-General Pradeep Mehta said at a Finance
Ministry meeting with various stakeholders to get inputs for preparing
a roadmap for a new focused subsidy regime.
He said the government collected about Rs 6,000 crore as cess on
domestically produced crude oil and had an equal amount in the form of
petroleum subsidies.
“Over the past three decades, the government had collected about Rs
50,000 crore as cess and almost all of it has gone to the coffers of
the Finance Ministry. The cess amount now seems to be an implicit
arrangement of meeting the petroleum subsidy burden,” Mr Mehta said.
The cess was introduced in the mid-70s to provide financial assistance
to state-owned companies.
Slamming too much intervention, Mr Mehta said though the administered
price mechanism was abolished in March, 2002, the government continued
to play a major role in determining the prices of petroleum products
and there was absolutely no ‘transparency’ in their pricing.
He said even the method of calculating subsidies on LPG and kerosene
was distorted, as it was based on import parity pricing of petroleum
products and not on the basis of unrecovered costs, which was the
appropriate figure for calculating subsidy. — http://www.tribuneindia.com/2005/20050531/biz.htm#