Petrol to be costlier by Rs 4/litre, kerosene Rs 6/litre, LPG Rs 100/cylinder
BILAL HUSSAIN
SRINAGAR: While draining the state economy of several crores of rupees, the proposed hike in petrol and diesel prices by the centre would curtail the purchasing power of an aam admi, say the Valley economists.
J&K meets all its petrol and diesel needs by import from outside. With the burgeoning increase in the number of vehicles, the import has witnessed tremendous rise over past some years.
Noted economist of Kashmir Prof Nissar Ali said told Kashmir Times that the incase the recommendation are accepted and implemented then it would two way drain Jammu and Kashmir’s economy one at macro economy level by draining state’s economy and second by affecting the purchasing power of the consumers. According to him the oil hike would raise the inflation rate through oil inflation. “It will further aggravate the commodities price rise.”
Given this huge quantum of import into the state, economist believe even a nominal increase in the price drains the state of crores of rupees.
Echoing similar views one of the state’s business champ says the hike would have an impact on the aam admi. "The price rise of LPG would have a direct impact on the purchasing power of common people," said president Kashmir Chamber of Commerce and Industries, Nazir Ahmad Dar.
According to the Dar, J&K is a consumer state and most of the commodities are imported from outside. "As diesel prices increase it would shoot up commodity prices," he said, adding that the price hike could also make the raw material for local Industry dearer.
"The price hike would add to transportation costs that in turn would shoot up the price of commodities including vegetable coming to Kashmir from outside.”
The Kirit Parikh panel submitted its much-awaited report on fuel pricing to the oil ministry today. The report has suggested, among other things, complete deregulation of petrol and diesel prices.
After the report was presented, oil secretary, S Sundaresh has said that the Prime Minister Manmohan Singh wants the Parikh report to be passed soon. Oil Minister Murli Deora has said that the Parikh report would be put before the cabinet for discussion in a week.
Recommendations: The report made recommendations on 4 major fuel groups: petrol, diesel, kerosene and LPG.
On petrol: Complete deregulation of prices.
On kerosene: Kerosene subsidy should continue. Must issue smart cards for subsidised kerosene distribution. Need to rationalise kerosene supply under PDS as currently 35% of PDS kerosene is used to adulterate diesel. In favour of linking kerosene price hike to rural income. In favour of Rs 6/l hike in kerosene.
On diesel: Should link diesel price hike to per capita income.
On LPG: LPG burden subsidy currently very high at Rs 287/ cylinder. In favour of Rs 100/ cylinder hike in LPG. In favour of fixed govt subsidy sharing for cooking fuel revenue loss. The report aims to make the domestic oil industry competitive. Currently the under-recoveries of public sector oil marketing companies are seen at Rs 40,000 crore in FY10. Parekh said that the current fuel price policy was not sustainable and the report has sought ONGC's opinion on revenue sharing.
The estimated under-recoveries in the last three quarters is Rs 29,000 crore, out of which upstream companies - ONGC and Oil India Ltd - have contributed Rs 8,000 crore towards losses from petrol and diesel. The government has so far promised only Rs 12,000 crore as cash for under-recoveries from kerosene and LPG, but this leaves a shortfall of Rs 9,000 crore for the period April to December 2009.
The total estimated under-recoveries for this fiscal is Rs 43,000 crore, at a global oil price of USD 73 per barrel.
People here also fear that the fresh oil price hike could lead to fare hike. "The fresh diesel price hike would increase the transportation cost and the worst hit by the move would be the commoner," said Tahir Yousf Rather, a local.
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