Oil Subsidies: Govt To Spend Rs 24,774 Cr More

The government has sought parliament's approval to spend an additional Rs 24,774 crore on oil subsidies in the current fiscal year that ends in March.

New Delhi expects the total spending on oil subsidies for the year to be Rs 96,880 crore.

Oil Minister M Veerappa Moily had said on 6 March that not compensating oil PSUs for their losses will put question mark on their survival. The three OMCs, IOC, BPCL and HPCL, are together projected to end the fiscal with a revenue loss of Rs 1,63,000 crore. Of this, the Finance Ministry wants to shave off Rs 17,000 crore by changing methodology to export parity pricing (EPP).

The net cash outgo will be only Rs 40,967.27 crore, as per the Supplementary Demands for Grants tabled in Lok Sabha by Finance Minister P Chidambaram.

The second and final batch of Supplementary Demands for Grants for 2012-13 includes 65 grants and one appropriation.

"Approval of the Parliament is sought to authorise gross additional expenditure of Rs 49,715.54 crore. Of this, the proposals involving net cash outgo aggregate to Rs 40,967.27 crore and gross additional expenditure, matched by savings of the Ministries/Departments or by enhanced receipts/recoveries aggregate to Rs 8,747.29 crore," the document said.

Of the total amount, Rs 9,914.06 crore and Rs 4,753.99 crore have been sought for food and fertiliser subsidies respectively.

Parliament's nod was also sought for spending Rs 24,773.75 crore for providing compensation towards estimated under recoveries to oil marketing companies on account of sale of petroleum products and subsidy to them for supply of natural gas to north eastern region has also been sought.

Besides, a token provision of Rs 98 lakh was sought - Rs one lakh for each item of expenditure - for enabling re-appropriation of savings in cases involving new services or new instruments of service.

The Supplementary Demands for Grants for 2012-13 was also tabled in Rajya Sabha.

Diesel Subsidy Needs to Be Frozen
The government may have to freeze the diesel subsidy at the current level to protect the budget numbers at some point in time, Chief Economic Advisor to the Finance Minister, Raghuram Rajan, said earlier this week while flagging concerns over the widening current account deficit.

"At some point, we should think about freezing the subsidy on diesel at the current levels until it reaches the level of world prices so that the budget is not exposed to the risks of an increase in global oil price," Rajan told the convocation of the RBI-run National Institute of Bank Management

Terming the widening current account deficit, which had run up to a historic high of 5.4 per cent of GDP in Q2 of the fiscal, as the "biggest concern now," the noted economist said, "CAD is our biggest concern right now because as you finance from outside, you are dependent on the interest of foreign investors. They've been supporting us so far due to the search for yields. But can we continue to rely on that forbearance?"

Finance Minister P Chidambaram, during his customary post-budget interaction with the industry chambers yesterday, had said that CAD is the biggest worry for him now as he could successfully meet the fiscal deficit target at 10 bps better at 5.2 per cent and said the final numbers would be lowest than this too.

Uproar Over LPG Cylinder Subsidies
Lok Sabha witnessed uproar over government's assertion that six subsidised LPG cylinders were enough for a normal family per year.

During Question Hour, members made a strong pitch for increasing the number of subsidised LPG cylinders from current nine to 12 per connection per year.

"Ninety per cent population uses nine LPG cylinders per year. Based on a survey, for a normal family six cylinders are enough," Minister of State for Petroleum and Natural Gas Panabaka Lakshmi said.

Her reply to supplementaries asked by Raosaheb Danve Patil (BJP) triggered uproar as UPA constituents NCP and DMK joined the opposition in raising slogans for increasing the number of subsidised LPG cylinders.

Speaker Meira Kumar urged members to calm down and allow a woman to answer the question. She pointed out that today was international women's day.

Gorakhnath Pandey (BSP) remarked that perhaps the government had not consulted its women members while finalising the subsidy on cooking gas.

Lakshmi said ever since a cap on subsidised LPG cylinders was introduced, domestic consumption has reduced by 5.4 per cent and commercial consumption has increase by 12.5 per cent.

"Oil Marketing Companies undertake regular surprise inspections at distributor's premises, conduct refill audits and surprise checks at customer's premises and en-route checking of delivery vehicles," she said.

The minister said if LPG distributors were found guilty of any malpractice, punitive action was taken in accordance with provisions of the marketing discipline guidelines.

(Agencies)